When a government subsidy is granted to the buyers of a product, sellers can end up capturing some of the benefit because
a. the market price of the product will fall in response to the subsidy.
b. the market price of the product will rise in response to the subsidy.
c. the market price of the product will not change in response to the subsidy.
d. buyers will reduce their demand for the product.
B
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Assuming all excess reserves are loaned out, currency holdings by the public are zero, and a reserve ratio of 5 percent, an initial deposit of $10,000 will lead to a total increase in deposits of
A) $500. B) $10,000. C) $50,000. D) $200,000.
If an individual's housing purchases are always a constant fraction of income, then the income elasticity of demand for housing is
a. greater than one. b. equal to one. c. less than one. d. Cannot be determined from the available information.
Outline the policy choices for contractionary and expansionary options of the Fed
New scientific knowledge mainly comes from university and government laboratories, not private firms, because:
A. large corporations do not have funds available to channel toward basic research. B. government pays scientists higher salaries than do private firms. C. entrepreneurs find it difficult to secure venture capital to finance innovation. D. basic scientific principles, as such, cannot be patented and do not always have commercial