If the price of gasoline goes up by 50% and the quantity demanded goes down by 25%, the absolute value of the price elasticity of demand is
A) 0.25.
B) 0.50.
C) 0.75.
D) 1.00.
Answer: B
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A currency drain occurs when the
A) Fed increases the required reserve ratio. B) Fed sells U.S. government securities. C) non-bank public increases its holdings of currency outside the banking system. D) banks reduce the number of loans they create with their excess reserves. E) Fed buys U.S. government securities.
An indifference curve shows
A) the relationship between prices and a household's budget. B) all possible prices and preferences for a good. C) combinations of goods among which a household is indifferent. D) budget lines among which a consumer is indifferent.
The Fed can offset the effects of an increase in float by engaging in
A) a repurchase agreement. B) a matched sale-purchase transaction. C) an interest rate swap. D) an open market purchase.
Refer to Table 10.1. If the price of output is $10 per unit, the marginal revenue product of the third unit of labor is:
A. $50. B. $60. C. $500. D. $600.