The price elasticity of demand coefficient for gourmet coffee is estimated to be equal to 1.6 . It is expected, therefore, that a 10 increase in price would lead to:
a. a 16 decrease in the quantity of gourmet coffee demanded.
b. a 16 increase in the quantity of gourmet coffee demanded.
c. an 8 decrease in the quantity of gourmet coffee demanded.
d. an 8 increase in the quantity of gourmet coffee demanded.
Question 2If a bank receiving a new deposit of 200,000 would be able, as a result, to increase their lending by at most 150,000, then the required reserve ratio equals:
a. 4.
b. 25.
c. 40.
d. 50.
Question 3A recessionary real shock is associated with an outward shift of the short-run Phillips curve and with a leftward shift of the short-run aggregate supply curve.
a. True
b. False
Indicate whether the statement is true or false
Question 4If a small change in price will lead to an infinite change in the quantity demanded, then the demand curve is:
a. Perfectly elastic.
b. Perfectly inelastic.
c. Downward sloping.
d. non-linear
Question 5If a bank has 1 million in demand deposits, 400,000 in reserves, and faces a 30 percent reserve requirement, the amount of money that a bank could initially create by loaning out their excess reserves is:
a. 600,000.
b. 400,000.
c. 300,000.
d. 100,000.
Question 6The hypothesis of political business cycles is based on the assumption that a vertical Phillips curve always holds.
a. True
b. False
Indicate whether the statement is true or false
Question 7If a small change in price will lead to an infinite change in the quantity demanded, then the demand curve is:
a. horizontal.
b. vertical.
c. inclined.
d. non-linear.
Question 8If a bank has 1 million in demand deposits, 350,000 in reserves, and faces a 30 percent reserve requirement, the amount of money that a bank could initially create by loaning out their excess reserves is:
a. 50,000.
b. 300,000.
c. 350,000.
d. 700,000.
Question 9In the long run, the economy is better off if policymakers exploit the short-run trad-eoff between inflation and the unemployment rate.
a. True
b. False
Indicate whether the statement is true or false
Question 10The nation's largest cable TV company tested the effect of a price reduction for premium movie channels. It increased prices from 20 to 30 per month and found virtually no change in the number of customers. This means:
a. the demand curve for the premium movie channels shifted to the right.
b. the supply curve for premium movie channels shifted to the left.
c. the demand for premium movie channels is very elastic in this price range.
d. the demand for premium movie channels is very inelastic in this price range.
Question 11A reserve requirement of 25 percent would mean that each dollar of reserves could support ____ of demand deposits.
a. 0.25
b. 0.75
c. 1.33
d. 4.00
Question 12If credible low-money-growth policies were continually pursued by the Fed, nominal wages and prices would eventually fall as the economic agents would expect lower inflation rates over time.
a. True
b. False
Indicate whether the statement is true or false
Question 13The nation's largest cable TV company tested the effect of a price increase for premium sports channels. It increased prices 10 and found that the number of customers decreased by more than 40. This means:
a. the demand curve for the premium sports channels shifted to the right.
b. the supply curve for premium sports channels shifted to the left.
c. the demand for premium sports channels is elastic in this price range.
d. the demand for premium sports channels is inelastic in this price range.
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