Total revenue for skis is at a maximum when the price elasticity of demand is
A) between 0 and 1.
B) 1.
C) greater than 1.
D) 0.
B
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The quantity theory of money is a theory of how
A) the money supply is determined. B) interest rates are determined. C) the nominal value of aggregate income is determined. D) the real value of aggregate income is determined.
Free markets produce relatively high levels of efficiency but low rates of growth
a. True b. False Indicate whether the statement is true or false
People hold $400 million of bank deposits but no currency. Banks have made $380 million dollars of loans and only hold enough reserves to satisfy reserve requirements. Because of uncertainty, banks choose to hold $10 million more in reserves. The Fed takes no action. What happens to bank loans?
a. they fall $220 million b. they fall $200 million c. they rise $200 million d. they rise $220 million
Answer the following statement(s) true (T) or false (F)
1. The government can influence the economy through its fiscal policy by making changes in the money supply. 2. When the Federal Reserve Bank buys or sells U.S. securities, it changes the level of reserves in the banking system, which has an effect on interest rates. 3. The discount rate is the interest rate banks are charged when they borrow money from the Fed. 4. The Fed relies primarily on changes in the reserve requirement (the minimum amount of money banks must hold in reserve to cover deposits) to ease or tighten the money supply.