According to one study, the price elasticity of demand for cigarettes is 0.25. To decrease the consumption of cigarettes by 8 percent, a tax on cigarettes must raise the price of cigarettes by
A) 32 percent.
B) 25 percent.
C) 2 percent.
D) 3.1 percent.
A
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If the Fed wants to close a recessionary gap, should it buy or sell government securities? Why?
What will be an ideal response?
In the figure above, if Mac and Izzie both completely specialized and traded with one another, their joint output would be
A) 3 computers and 3 TV sets per month. B) 6 computers and 6 TV sets per month. C) 12 computers and 12 TV sets per month. D) 24 computers and 24 TV sets per month.
Vault cash is equal to $8 million, deposits by depository institutions at the central bank are $2 million, the monetary base is $30 million, and bank deposits are $100 million. The money multiplier is equal to
A) 2.5. B) 3.0. C) 4.0. D) 5.0.
Economists who favor activist monetary policy often argue that
A) during the mid-1970s, money supply growth rates were nearly constant and still the economy went through a recession. B) during the mid-1970s, activist monetary policy was applied and the economy was healthy and stable. C) activist monetary policy is inflexible and this is one of its virtues; the money supply doesn't change every year in response to political considerations. D) activist monetary policy is likely to be destabilizing most of the time, but still it is the better way to proceed.