In Figure 15.3, the Fed can change the equilibrium interest rate from 2 percent to 6 percent by
A. Increasing the amount of coins in circulation.
B. Decreasing the reserve requirement.
C. Raising the discount rate.
D. Buying bonds in the open market.
Answer: C
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If the percentage change in the price of a good is equal to the percentage change in the quantity demanded of that good, then the demand for that good is:
A. inelastic. B. unit elastic. C. elastic. D. perfectly elastic.
Answer the next question using the figure below.
In the diagram, line AB is the U.S. production possibilities curve and line ACÂ shows the consumption possibilities for the U.S. after it has decided to engage in international trade. We can conclude that the United States
A. has decided to trade beef for cheese. B. has chosen to specialize in the production of cheese. C. is relatively more efficient than its trading partners in producing both cheese and beef. D. has chosen to specialize in the production of beef.