Patricia's nominal annual income in 2009 was $60,000. If the rate of inflation is constant at 10 percent, in order to keep Patricia's real income constant, her nominal income in the year 2010 should be:
A. $60,000.
B. $54,000.
C. $66,000.
D. $70,000.
C. $66,000.
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When a demand schedule is drawn as a graph,
A. price is measured on the vertical axis. B. quantity is measured on the horizontal axis. C. the resulting curve has a negative slope. D. the other variables (besides price and quantity) are held constant. E. All of these responses are correct.
Everything else remaining unchanged, what will happen if the Fed sells government bonds in the open market and borrowed reserves is zero?
A) It will cause both the equilibrium federal funds rate and equilibrium quantity of reserves to fall. B) It will cause the equilibrium federal funds rate to fall, but no change in the equilibrium quantity of reserves. C) It will cause the equilibrium federal funds rate to rise, but no change in the equilibrium quantity of reserves. D) It will cause the equilibrium federal funds rate to rise and the equilibrium quantity of reserves to fall.
Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for coffee. What happens in this market if buyers expect the price of coffee to rise?
A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)
If the absolute value of the price elasticity of demand for aspirin equals 0.8 then
A) aspirin has few substitutes. B) the demand for aspirin is elastic. C) the demand for aspirin is inelastic. D) aspirin is a normal good.