Along any IS curve
a. both government spending and expectations are fixed.
b. government spending and the price level may vary.
c. consumption and the price level are fixed.
d. both government spending and tax rates may vary.
e. all of the above
A
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When prices on science fiction novels decreased by 5%, the quantity demanded increased by 20%. The price elasticity of demand is
a. 4. b. 20. c. 0.25. d. 5.
The idea of requiring motorists to pay to use the busiest streets in a city
a. has been proposed by many public officials, but to date the idea never has been tried in a major city anywhere in the world. b. was tried in New York City in the 1990s, but the result was more — not less — congestion on busy streets, and the experiment was short-lived. c. reflects the fact that a congested road is a public good. d. reflects the fact that a congested road is a common resource.
Suppose a bank has $10,000 in deposits and $1,000 in reserves. The required reserve ratio is 5%. Which of the following occurs if the required reserve ratio is increased to 10%?
A) The bank's required reserves will decrease to $500. B) The bank's excess reserves will increase to $1,000. C) The bank's required reserves will increase to $1,000. D) The bank's ability to create loans increases by 5%.
An economist observes that a pharmaceutical company is sponsoring a diabetes clinic and providing free medications. She concludes that the pharmaceutical company is reducing short-term profits for the possibility of higher long-term profits. This economist is most likely a(n):
A. irrational economist. B. behavioral economist. C. traditional economist. D. engineering economist.