The real rate of interest is the
a. money rate of interest plus the inflationary premium.
b. money rate of interest minus the inflationary premium.
c. yield one can expect to receive on loanable funds without taking significant risk.
d. risk component associated with the ownership of real assets.
B
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Which of the following is most likely to have an income elasticity of demand that exceeds 1?
A) tobacco B) alcoholic beverages C) airline travel D) food E) telephone
Is there any set of relationships between price elasticity of supply and total revenue similar to the relationships between price elasticity of demand and total revenue?
What will be an ideal response?
A firm practicing group price discrimination that has constant marginal cost will
A) maximize total profit by maximizing profit for each group separately. B) will charge the same price to all groups. C) will act like a monopoly and treat all groups the same. D) sets p = MC.
Assume that the Paris First National Bank currently has deposits of $20 million. If the current required reserve ratio is raised from 20 percent to 40 percent, then:
a. Paris First National Bank does not have to comply with the Federal Reserve mandate. b. required reserves will decrease from $16 million to $12 million. c. excess reserves will automatically increase by $20 million. d. Paris First National Bank must close out 4 million in loans. e. Paris First National Bank must increase its required reserves from $4 million to $8 million.