Along a linear demand curve, price elasticity of demand is:

Along a linear demand curve, price elasticity of demand is:
 a. constant.
 b. more elastic to the northwest than to the southeast.
  c. less elastic to the northwest than to the southeast.
  d. always equal to one.

Question 2

If a bank had 200 million in demand deposits and faced a 40 percent reserve requirement, it would be required to hold ____ as reserves and could have a total amount of loans issued up to ____.
 a. 120 million; 80 million
  b. 80 million; 120 million
  c. 200 million; 500 million
  d. 500 million; 200 million

Question 3

Since the growth in the money supply is unrelated to government spending, fiscal policy and monetary policy can be conducted independently.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 4

If Education R Us University thought that it faced an inelastic demand for the regular academic year but an elastic demand for summer school, and it wanted to increase its total tuition revenue, it would want to____ tuition in the regular academic year and ____ tuition for summer school
 a. Increase; increase.
 b. Increase; decrease.
  c. Decrease; increase.
  d. Decrease, decrease.

Question 5

If a bank gets a 100,000 new deposit, chooses to lend out 85,000, and increases its excess reserves by 5,000 at the same time, then the reserve requirement is:
 a. 10.
 b. 15.
 c. 20.
 d. unable to be determined from the information given.

Question 6

Other things equal, the higher the fiscal deficit, the higher the required increase in base money.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 7

A recent study at a liberal arts college concluded that demand elasticity is 0.91 for college courses. The administration is considering a tuition increase to help balance the budget. An economist might advise the school to:
 a. decrease tuition in order to increase revenue by boosting enrollment.
 b. increase tuition in order to increase revenue.
 c. leave tuition unchanged as a change in tuition is unlikely to enhance the school's budget by increasing revenue.
  d. decrease tuition because demand for courses is elastic.

Question 8

If a bank gets a 100,000 new deposit, chooses to lend out 75,000, and increases its excess reserves by 5,000 at the same time, then the reserve requirement is:
 a. 30.
 b. 25.
 c. 20.
 d. unable to be determined from the information given.

Question 9

More stable macroeconomic policy does not contribute to less variability in real output.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 10

Which of the following is not a major determinant of the price elasticity of demand?
 a. availability of close substitutes
 b. proportion of income spent on the good
 c. The supply of goods available
 d. amount of time that has elapsed since the price change

Question 11

If a bank receiving a new deposit of 200,000 would be able, as a result, to increase their lending by at most 120,000, then the required reserve ratio equals:
 a. 4.
 b. 25.
  c. 40.
  d. 50.

Question 12

According to Regulation Q, the maximum interest rate that the U.S. banks could pay on deposits was limited by the Federal Reserve. This reduced volatility in the financial markets and largely benefited the U.S. banks.
 a. True
  b. False
  Indicate whether the statement is true or false