Suppose that when the price of donuts rises 10%, the quantity demanded of donuts falls 3%. Based on this information, what is the approximate absolute price elasticity of demand for donuts?
A) 3.33
B) 0.3
C) 30
D) 1.3
Answer: B
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In the recession that started in 2008, the savings rate:
A. increased. B. decreased. C. stayed the same. D. became negative.
When the Fed raises the legal reserve requirement, it
a. lowers the cost of borrowing from the Fed, allowing banks to make more loans b. raises the cost of borrowing from the Fed, disallowing banks from making the same quantity of loans c. increases the amount of excess reserves that banks hold, allowing them to make more loans d. increases the amount of excess reserves that banks hold, disallowing them from making the same quantity of loans e. decreases the amount of excess reserves that banks hold, disallowing them from making the same quantity of loans
If you put $1,000 in the bank today at an interest rate of 6% what is its value in two years?
a. $2,000(1.06) b. $1,000 + $(1.06)2 c. $1,000(1.06)2 d. None of the above are correct.
Under a negative income tax program,
A. the government guarantees a minimum level of family income. B. a family must pay income taxes on its welfare check. C. a family receives a stated amount of money from the government plus its members can keep all income earned through work. D. the government reduces the welfare payment by any income earned through work.