"If gasoline were taxed, the price of gasoline would rise. Consequently, the demand for gasoline would fall, causing the price to fall to the original level." This statement is...
What will be an ideal response?
incorrect--demand and quantity demanded are confused. The price increase would reduce quantity demanded, not demand
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If the reserve requirement on checkable deposits is .25, the ratio of currency held by the public to
demand deposits is .15, the ratio of time deposits to demand deposits is 3, the reserve requirement on time deposits is 0, and the ratio of excess reserves to demand deposits is 0, then the demand deposit multiplier is A) 5. B) 4. C) 3.33. D) 2.5.
When a tax is placed on the buyers of a product, the
a. size of the market decreases. b. effective price received by sellers decreases, and the price paid by buyers increases. c. demand for the product decreases. d. All of the above are correct.
Indy has a price elasticity of demand for beer of 1.00. Suppose the price of each beer is increased by 10 percent. What will happen to the total amount Indy spends on beer?
A. It will decrease 10 percent. B. It will not change. C. It will increase 10 percent. D. It is impossible to tell.
When universities announce a large tuition increase and follow it with an announcement that more financial aid will be available, they are assuming that students who pay full tuition:
A. Have elastic demand and students who use financial aid have inelastic demand B. Have inelastic demand and students who use financial aid have elastic demand C. View a college education as an inferior good and students who use financial aid view it as a normal good D. View a college education as a normal good and students who use financial aid view it as an inferior good