A binding price ceiling is designed to:
a. increase efficiency.
b. raise the price above the equilibrium price.
c. keep the price below the equilibrium price.
d. generate a surplus
Ans: c. keep the price below the equilibrium price.
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If the demand for a good is determined to be "inelastic," then the elasticity measure
A) is greater than 1.0. B) is equal to 1.0. C) is less than 1.0. D) is infinite.
The demand for money varies
a. directly with both the price level and the level of real GDP. b. inversely with both the price level and the level of real GDP. c. inversely with the price level and directly with the level of real GDP. d. directly with the price level and inversely with the level of real GDP. e. inversely with the level of nominal GDP.
Money as a medium of exchange
I. Facilitates the exchange of goods II. Reduces the incentive to barter A) I only B) II only C) Both I and II D) Neither I nor II
If the multiplier in the economy is 3, the marginal propensity to save (MPS) must be
A) 3. B) 0.67. C) 0.33. D) 1.