Which of the following best represents the law of demand?
A) As the price of a good decreases, the demand for the good increases.
B) As the price of a good increases, the quantity demanded of that good decreases.
C) As the demand for a good increases, the price of that good increases.
D) As the price of a good decreases, the demand curve for that good shifts to the right.
B
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Suppose Warren Buffet withdraws $1 million from his checking account at Chase Bank. If the required reserve ratio is 20 percent, what is the maximum change in deposits in the banking system?
A) -$5 million B) -$4 million C) -$200,000 D) $1 million E) $5 million
If investment has a low sensitivity to the interest rate, the IS curve is rather __________, so that monetary policy has a __________ effect on GDP
A) flat; strong B) flat; weak C) steep; strong D) steep; weak
A depreciation of the U.S. dollar will encourage, other things the same ________
A) the purchase of foreign goods by foreign economic agents B) the purchase of foreign goods by U.S. economic agents C) the purchase of U.S. assets by foreign economic agents D) the purchase of foreign assets by U.S. economic agents
Which of the following indices best signals future movements in retail prices?
a. The implicit GDP deflator b. nominal GDP c. The consumer price index d. The producer price index e. The measure of economic welfare (MEW)