The income effect of an increase in the price of peaches is
A) the change in the quantity of other fruit demanded that results from the impact of the price change on purchasing power, holding all other factors constant.
B) the change in the quantity of peaches demanded that results from the effect of the change in price on consumer purchasing power, holding all other factors constant.
C) the change in the demand for peaches as a result of the change in the price of peaches, holding all other factors constant.
D) the change in the quantity of peaches demanded that results from the price increase, making peaches more expensive than other fruit, holding constant the effect of the price change on consumer purchasing power.
B
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If a nation's central bank increased domestic interest rates, the nation's exchange rate would change if the country's exchange rate was a
A) a flexible exchange rate. B) a fixed exchange rate. C) a crawling peg. D) a nominally fixed exchange rate.
In the above figure, curve D slopes downward because
A) average fixed costs decrease as output increases. B) all costs decrease as output increases. C) there are diminishing returns. D) there are decreasing marginal costs.
Imagine that Wingate National is a new bank, and that the legal reserve requirement is 10 percent. If it accepts a $1,000 deposit, then its required reserves balance is
a. $0 b. $90 c. $100 d. $900 e. $910
The stand-alone selling price of a good or service may be highly uncertain because the seller
A. has not previously sold the good or service. B. sells the product or service in various combinations with other goods or services. C. provides the same good or service to different customers at substantially different prices