Answer the following statements true (T) or false (F)
1. If the percentage change in quantity demanded is less than the percentage change in price, then demand is said to be elastic.
2. A good with a price-elasticity coefficient of 0.75 has a demand that is price-inelastic.
3. If the quantity demanded for good A increases from 40 to 60 when price decreases from $9 to $7, price elasticity of demand in this price range is 1.6.
4. In the price range where demand is elastic, if the seller of the good raises its price, then total revenues will increase.
5. If the price-elasticity coefficient for a product is 0.68 and the seller wants to raise revenues by changing its price, then the seller should cut the price of the product.
1. FALSE
2. TRUE
3. TRUE
4. FALSE
5. FALSE
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For a fixed money supply, a higher level of real balances implies
A. a higher price level. B. a lower price level. C. higher velocity of money. D. lower velocity of money.
Assuming all excess reserves are loaned out, if the reserve ratio is 8 percent, the money multiplier will be equal to
A) 2. B) 8. C) 12.5. D) 16.67.