When price is $5 per unit, quantity demanded is 12 units. When price is $6 per unit, quantity demanded is 8 units. The value of the absolute price elasticity of demand is approximately
A) 2.20.
B) 4.00.
C) 1.82.
D) 0.36.
Answer: A
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The Fed buys $100 million of government securities from Bank A. What is the effect on the Federal Reserve's balance sheet?
A) Securities increase by $100 million and Federal Reserve notes (currency) decrease by $100 million. B) Securities increase by $100 million and reserves of Bank A increase by $100 million. C) Securities increase by $100 million and reserves of Bank A decrease by $100 million. D) Securities decrease by $100 million and reserves of Bank A increase by $100 million.
According to the neoclassical growth model, economic growth in the steady state occurs because of
a. increasing populations, which increase the demand for consumption. b. exogenous increases in technology. c. international trade. d. active governments, which stimulate consumption through government spending. e. all of the above.
Cartel members have an incentive to cheat on the cartel because:
a. the cartel does not maximize profits. b. the cartel price is the competitive price. c. each member's output quota is too high. d. each member's MR is not equal to the cartel's MC. e. the industry profit would be higher under competitive conditions.
In a 100-percent-reserve banking system, if people decided to decrease the amount of currency they held by increasing the amount they held in checkable deposits, then
a. M1 would increase. b. M1 would decrease. c. M1 would not change. d. M1 might rise or fall.