The government proposes a tax on flowers in order to boost its revenue. Consumers will bear all of ...

The government proposes a tax on flowers in order to boost its revenue. Consumers will bear all of this tax if the:
 a. demand for flowers is perfectly inelastic.
  b. supply of flowers is perfectly inelastic.
  c. demand for flowers is perfectly elastic.
  d. demand for flowers is unit elastic.

Question 2

How could the rumor of a bank failure actually turn into a bank failing? Is the bank really without assets?

Question 3

Keynesian economists today favor a model in which the aggregate supply curve is relatively flat at low levels of real GDP and slopes downward as real GDP approaches its potential level.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 4

The government proposes a tax on flowers in order to boost its revenue. Consumers will bear no part of this tax if the:
 a. demand for flowers is perfectly inelastic.
  b. supply of flowers is perfectly elastic.
 c. demand for flowers is perfectly elastic.
  d. demand for flowers is unit elastic.

Question 5

Suppose the banking system as a whole has 600 billion in deposits and 66 billion in reserves, with a reserve ratio of 11 percent. What happens to the stock of money if the Fed lowers reserve requirements by changing the reserve ratio to 10 percent?

Question 6

Traditional Keynesians would argue that fluctuations in aggregate demand are closely tied to fluctuations in investment.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 7

If the demand for apples is highly elastic and the supply is highly inelastic, then if a tax is imposed on apples it will be paid:
 a. largely by the sellers of apples.
 b. largely by the buyers of apples.
 c. equally by the sellers and buyers of apples.
  d. by the government.

Question 8

Why is the change in reserve requirement not frequently used to control the supply of money?

Question 9

Traditional Keynesian economics assumes that prices are relatively flexible in response to changes in aggregate expenditures.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 10

A tax is imposed on wine. Sellers will bear the full burden of this tax if the:
 a. demand for wine is perfectly inelastic.
 b. price elasticity of demand for wine equals 1.0.
  c. demand for wine is unit elastic.
 d. supply for wine is perfectly inelastic.

Question 11

Name four of the six primary functions of the central bank.

Question 12

According to the Keynesian school of thought, the economy is not self-regulating. That is, to achieve a satisfactory level of real GDP, the government often has to intervene by managing aggregate demand.
 a. True
  b. False
  Indicate whether the statement is true or false