Demand for a "once-in-a-lifetime event" is likely to be
A. perfectly elastic because life is short.
B. more elastic than a reoccurring one.
C. exactly as elastic as a reoccurring one.
D. less elastic than a reoccurring one.
Answer: D
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If the demand curve for bottled water shifts rightward and the supply curve of bottled water shifts rightward, the equilibrium
A) price of bottled water definitely increases. B) price of bottled water definitely decreases. C) quantity of bottled water definitely increases. D) quantity of bottled water definitely decreases.
Consider two countries, Alpha and Beta. In Alpha, real GDP per capita is $6,000. In Beta, real GDP per capita is $9,000
Based on the economic growth model, what would you predict about the growth rates in real GDP per capita across these two countries? A) The growth rate of real GDP per capita in Alpha and Beta will be the same. B) The growth rate of real GDP per capita will be higher in Alpha than it is in Beta. C) The growth rate of real GDP per capita will be lower in Alpha than it is in Beta. D) The economic growth model makes no predictions regarding differences in growth rates of real GDP per capita across the two countries.
In the two-period model with asymmetric information, the presence of bad borrowers who always default
A) makes good borrowers better off. B) matters only for the loan interest rate faced by bad borrowers. C) affects the equilibrium profits of banks. D) affects good borrowers adversely.
Best National Bank operates with a 20 percent required reserve ratio. One day a depositor withdraws $500 from his or her checking account at this bank. As a result, the bank's excess reserves:
a. fall by $500 b. fall by $400. c. rise by $100 d. rise by $500.