We would expect the cross-price elasticity of demand between Pepsi and Coke to be
A. negative, indicating substitute goods.
B. positive, indicating substitute goods.
C. positive, indicating secondary goods.
D. positive, indicating general goods.
Answer: B
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Banks use credit rationing rather than simply raising the interest rate charged borrowers with higher default risks because
A) of fear of adverse selection problems. B) of interest rate ceilings in many states. C) of fear of offending the loan applicants. D) use of credit rationing is encouraged by the Federal Reserve.
While price discrimination is possible between two markets, it is not possible in more than two
Indicate whether the statement is true or false
If the MPC is .5, the multiplier is
A. .5. B. 1. C. 2. D. 4.
The share of net public debt owed to foreign residents today is close to
A. 100 percent. B. 50 percent. C. 10 percent. D. 80 percent.