Using Figure 3 below the distance between what 2 lines illustrate an inflationary expenditure gap?
A. PAE2 to PAE3
B. PAE1 to PAE2
C. Y1 to Y2
D. Y2 to Y3
A. PAE2 to PAE3
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Assume we have a simplified banking system in balance-sheet equilibrium. Also assume that all banks are subject to a uniform 10 percent reserve requirement and demand deposits are the only form of money. A commercial bank receiving a new demand deposit of $100 would be able to extend new loans in the amount of
A. $10.
B. $90.
C. $100.
D. $1,000.
Figure 18-3
In which panel of Figure 18-3 would an excise tax be borne entirely by the supplier?
A. 1 B. 2 C. 3 D. 4
What does elasticity of demand measure?
a. how responsive consumers are to advertising b. how responsive consumers are to price changes c. how much consumers are affected by layoffs d. how much consumers are affected by inflation
If income tax rates are increased in an attempt to balance the federal budget, we should expect to see
A. an increase in consumption and a decrease in GDP. B. an increase in consumption and an increase in GDP. C. a decrease in consumption and a decrease in GDP. D. a decrease in consumption and an increase in GDP.