An example of a contractionary monetary policy is
A) an increase in the required reserve ratio.
B) a decrease in the discount rate.
C) a reduction in the taxes banks pay on their profits.
D) the Fed buying government securities in the open market.
Answer: A) an increase in the required reserve ratio.
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In September 2005, destruction to U.S. gasoline refineries was caused by back-to-back storms along the U.S. Gulf Coast—Hurricane Katrina and Hurricane Rita. In one week, the average price of a gallon of gasoline in the United States increased by about
40 cents. Which of the following best explains why these events pushed up the price of gasoline? A) The demand curve for gasoline shifted to the left along the supply curve for gasoline. B) The supply curve for gasoline shifted to the left along the demand curve for gasoline. C) The demand curve for gasoline shifted to the right along the supply curve for gasoline. D) The supply curve for gasoline shifted to the right along the demand curve for gasoline.
Related to the Economics in Practice on page 102: Harriet runs a corner delicatessen and one day decides to raise her prices by 20 percent. Total revenue is likely to ________ when she first raises prices since demand is relatively ________ in the short term.
A. rise; inelastic B. rise; elastic C. fall; elastic D. fall; inelastic
Refer to the diagrams. The solid lines are production possibilities curves; the dashed lines are trading possibilities curves. The data contained in the production possibilities curves are based on the assumption of:
A. imperfect substitutability of resources between beer and pizza production.
B. constant costs.
C. decreasing costs.
D. increasing costs.
The government proposes a tax on red roses in order to boost their tax revenue. Consumers will bear no part of the tax burden if the: a. demand for roses is perfectly inelastic. b. supply of roses is perfectly elastic
c. demand for roses is perfectly elastic. d. demand for roses is unit elastic.