If the slope of a demand curve is infinite, then the price elasticity of demand is:
A. infinite.
B. one.
C. equal to the price of the good.
D. zero.
Answer: D
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Assume that the hourly price for the services of tarot card readers has risen and sales of these services have also risen. One can conclude that
A) the demand for tarot card readers has increased. B) the law of demand has been violated. C) the number of tarot card readers has increased. D) tarot card readers are deliberately charging high prices because they provide services for superstitious clients.
A lowering of the required reserve ratio might not expand the money supply if:
a. tax rates are also lowered at the same time. b. tax rates are increased at the same time. c. borrowers are unwilling to borrow the new funds the banks have available for loans. d. borrowers are willing to borrow the new funds the banks have available for loans.. e. borrowers expand their borrowing because of the lower interest rates that banks offer.
In the Keynesian cross model, when the level of aggregate demand in an economy is above the 45-degree line, ____
a. the level of aggregate expenditures in the economy will be lower than the level of output b. inventories will fall below the planned level c. businesses will decrease their level of production d. there will be an unexpected decrease in the sales of businesses
Assume that the central bank purchases government securities in the open market. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls, and reserve-related (central bank) transactions become more negative (or less positive). b. The quantity of real loanable funds per time period falls, and reserve-related (central bank) transactions remain the same. c. The quantity of real loanable funds per time period and reserve-related (central bank) transactions remain the same. d. The quantity of real loanable funds per time period rises, and reserve-related (central bank) transactions remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.