When an individual's purchasing power changes due to a change in the price of a good or service, this is referred to as
A. real-income effect.
B. substitution effect.
C. marginal effect.
D. utility effect.
Answer: A
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If the Fed raises the legal reserve requirement to 40 percent, and if the total money supply is at its maximum and is $750, the initial deposit must have been
a. $40 b. $250 c. $300 d. $450 e. $1,875
When the interest rate falls, the:
A. Asset demand for money decreases B. Transactions demand for money increases C. Total amount of money demanded increases D. Total amount of money demanded decreases
Suppose the real interest rate increases from 4 percent to 6 percent. As a result,
A) governments decrease their demand for loanable funds. B) firms increase their demand for loanable funds. C) governments increase the supply of loanable funds. D) firms decrease the quantity demanded of loanable funds. E) governments decrease the quantity supplied of loanable funds.
Brand loyalty in monopolistically competitive markets manifests itself as
A) upward sloping marginal cost curves. B) downward sloping demand curves. C) downward sloping marginal cost curves. D) upward sloping demand curves.