Price elasticity of demand is a measure of the relative responsiveness of the change in price to a change in quantity demanded.
a. True
b. False
Indicate whether the statement is true or false
Question 2A bank's assets consist of 500,000 in total reserves, 1,600,000 in loans, and a building worth 1,200,000 . Its liabilities and capital consist of 2,000,000 in demand deposits and 1,300,000 in capital. If the required reserve ratio is 25 percent, what is the level of the bank's excess reserves? How much could it loan out as a result?
a. zero; zero
b. 500,000; 500,000
c. 500,000; 2,000,000
d. 250,000; 1,000,000
Question 3The observed unemployment rate is less than the natural rate of unemployment if:
a. the inflation rate is lower than expected.
b. the reservation wage is adjusted to account for higher inflation.
c. real wage increases with increase in prices.
d. reservation wages go up with the rate of inflation.
e. the inflation rate is higher than expected.
Question 4Price elasticity of demand is a measure of the relative responsiveness of the change in quantity demanded to a change in price.
a. True
b. False
Indicate whether the statement is true or false
Question 5A bank's assets consist of 500,000 in total reserves, 1,600,000 in loans, and a building worth 1,200,000 . Its liabilities and capital consist of 2,000,000 in demand deposits and 1,300,000 in capital. If the required reserve ratio is 20 percent, what is the level of the bank's excess reserves? How much money could the excess reserves be used to create in the banking system as a result?
a. 100,000; 100,000
b. 400,000; 400,000
c. 100,000; 500,000
d. 400,000; 2,000,000
Question 6When workers expect more inflation than actually occurs:
a. the Phillips curve becomes vertical.
b. the long-run Phillips curve shifts to the right.
c. the short-run Phillips curve shifts to the left.
d. there will be a movement down the short-run Phillips curve.
e. there will be a movement up the short-run Phillips curve.
Question 7Explain the impact of: 1 . A rent ceiling set below the equilibrium price. 2 . A price floor set above the equilibrium price.
Question 8A bank's assets consist of 500,000 in total reserves, 1,600,000 in loans, and a building worth 1,200,000 . Its liabilities and capital consist of 2,000,000 in demand deposits and 1,300,000 in capital. If the required reserve ratio is 20 percent, what is the level of the bank's excess reserves? How much could it loan out as a result?
a. 100,000; 100,000
b. 100,000; 400,000
c. 400,000; 500,000
d. 400,000; 2,000,000
Question 9Assume that an unemployed person expects inflation to be 4.5 percent. In reality, inflation turns out to be 2.9 percent. If wage expectations lag behind actual price changes:
a. job offers below the reservation wage will decline, and the unemployment rate will rise.
b. job offers above the reservation wage will rise, and the unemployment rate will fall.
c. job offers above the reservation wage will decline, and the unemployment rate will rise.
d. job offers above the reservation wage will decline, and the unemployment rate will fall.
e. job offers below the reservation wage will increase, and the unemployment rate will fall.
Question 10In an attempt to reduce poaching of elephant ivory tusks, officials in Kenya burned illegally gathered ivory. Using your understanding of shifts in supply and demand, will this turn out to be a helpful or hurtful move on the Kenyan government's part?
Question 11A bank's assets consist of 500,000 in total reserves, 1,600,000 in loans, and a building worth 1,200,000 . Its liabilities and capital consist of 2,000,000 in demand deposits and 1,300,000 in capital. If the required reserve ratio is 10 percent, what is the level of the bank's excess reserves? How much money could the excess reserves be used to create in the banking system as a result?
a. 200,000; 200,000
b. 200,000; 2,000,000
c. 300,000; 300,000
d. 300,000; 3,000,000
Question 12If an increase in inflation is expected, which of the following events is the least likely to occur?
a. There will be an upward movement along the long-run Phillips curve.
b. Nominal GDP will increase.
c. Nominal wage rates will increase at the same rate as expected inflation.
d. A worker's reservation wage will rise at the same rate as expected inflation.
e. Unemployment rate will increase.
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