Suppose that the federal government grants a 50 cent per gallon subsidy to buyers of gasoline and that the demand for gasoline is highly inelastic while the supply is highly elastic. Under these circumstances, the benefit of the subsidy
a. will go primarily to producers.
b. will go primarily to consumers.
c. will be split equally between consumers and producers.
d. cannot be determined because the actual benefit of a subsidy is not influenced by the elasticities of supply and demand.
B
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Which of the following statements is correct with respect to the debate between the Keynesians and new classical economists?
a. Each side criticized monetarism b. The key source of disagreement centered on how people form their expectations. c. Both models believed that recessions were characterized by falling aggregate demand. d. Both believed that unanticipated changes in monetary policy could influence output. e. all of the above.
An argument in favor of price discrimination is that this pricing strategy permits some consumers who otherwise would be excluded from a market to buy a good or service
a. True b. False Indicate whether the statement is true or false
Which of the following statements is correct regarding the Fed? a. Under the Federal Reserve System, there is one Federal Reserve Bank, located in Washington D.C
b. Under the Federal Reserve System, there is one Federal Reserve Bank whose location changes every 14 years. c. Under the Federal Reserve System, there is a Federal Reserve Bank in each Congressional district. d. Under the Federal Reserve System, there is a Federal Reserve Bank in each state. e. Under the Federal Reserve System, there are 12 Federal Reserve banks, one in each of the 12 Federal Reserve districts.
Which of the following is NOT a commitment device?
A. A pre-nuptial agreement that provides for a large penalty in the event a spouse has an affair. B. A non-refundable advance payment to reserve a room at a resort. C. High fines for illegal parking on campus. D. A manufacturer's 2-year agreement to fix, at no cost to you, anything that breaks on your computer.