Suppose a tax is imposed on bananas. In which of the following cases will the tax cause the equilibrium quantity of bananas to shrink by the largest amount?
a. The response of buyers to a change in the price of bananas is strong, and the response of sellers to a change in the price of bananas is weak.
b. The response of sellers to a change in the price of bananas is strong, and the response of buyers to a change in the price of bananas is weak.
c. The response of buyers and sellers to a change in the price of bananas is strong.
d. The response of buyers and sellers to a change in the price of bananas is weak.
c
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Which of the following is likely to happen if the quantity of bank reserves held at the Fed increases?
A) The stock of money in the economy increases. B) The number of loans issued by banks decrease. C) Bank deposits decrease. D) The real interest rate increases.
What are the two components of federal spending?
What will be an ideal response?