A tax is imposed on orange juice. Consumers will bear the full burden of this tax if the:
a. price elasticity of demand for orange juice equals 1.0.
b. demand for orange juice is perfectly elastic.
c. demand for orange juice is unit elastic.
d. demand curve for orange juice is perfectly inelastic.
Question 2Explain how the Fed's structure provides a high degree of independence from the U.S. government. What are some of the benefits of this independence?
Question 3Which of the following schools of thought believes that the major source of the macroeconomic problems are the disequilibria in the private labor and goods market?
a. Keynesians and new Keynesians
b. Only monetarists
c. Only new classical economists
d. Monetarists and new classical economists
e. Monetarists and Keynesians
Question 4A tax is imposed on wine. Sellers will bear no burden from this tax if the:
a. demand for wine is perfectly inelastic.
b. demand for wine is perfectly elastic.
c. demand for wine is unit elastic.
d. supply curve for wine is perfectly inelastic.
Question 5How is money destroyed in the banking system?
Question 6A tax is imposed on orange juice. Consumers will bear more of the burden of the tax:
a. If the demand for orange juice is relatively inelastic and the supply is relatively elastic.
b. If the demand for orange juice is relatively elastic and the supply is relatively inelastic.
c. If the supply for orange juice is perfectly inelastic.
d. none of the above
Question 7Which of the following economic theories favors an active role for government in promoting low inflation and economic growth?
a. New Keynesian
b. Monetarists
c. New classical economists
d. Classical economists
e. Marxists
Question 8What limits a bank's ability to extend loans?
Question 9Which of the following schools of thought believes that wages and prices are rigid in the short run?
a. Keynesians and new Keynesians
b. Only monetarists
c. Only new classical economists
d. Monetarists and new classical economists
e. Monetarists and Keynesians
Question 10If the supply curve for aspirin is perfectly elastic, a reduction in demand will cause the equilibrium price to:
a. rise and the equilibrium quantity to fall.
b. rise and the equilibrium quantity to stay the same.
c. fall and the equilibrium quantity to fall.
d. stay the same and the equilibrium quantity to fall.