The Illinois Central Railroad once asked the Illinois Commerce Commission for permission to increase its commuter rates by 20 percent. The railroad argued that declining revenues made this rate increase essential. Opponents of the rate increase contended
that the railroad's revenues would fall because of the rate hike. It can be concluded that:
A. both groups felt that the demand was elastic but for different reasons.
B. both groups felt that the demand was inelastic but for different reasons.
C. the railroad felt that the demand for passenger service was inelastic and opponents of the
rate increase felt it was elastic.
D. the railroad felt that the demand for passenger service was elastic and opponents of the
rate increase felt it was inelastic.
Answer: C
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A bank's reserve ratio is 5 percent and the bank has $1,000 in deposits. Its reserve amount to
a) $5 b) $50 c) $95 d) $950
When consumption spending is greater than disposable income, we know with certainty that we have
A) dissaving. B) negative net investment. C) excess thrift. D) positive savings.