Jacob buys less soda when the price of soda rises 10 percent, while the prices of all other goods also rise 10 percent. Jacob is
A) behaving in accordance with classical economic theory.
B) worrying too much about a coming recession.
C) suffering from money illusion.
D) paying too much attention to changes in relative prices.
C
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The above figure shows the market for gourmet ice cream. In effort to reduce obesity, government places a $2 tax per gallon on suppliers in this market, shifting the supply curve from S0 to S1 The quantity of ice cream consumed before the tax is ________ gallons and the quantity consumed after the tax is ________ gallons.
A) 300,000; 200,000 B) 200,000; 250,000 C) 250,000; 200,000 D) 200,000; 300,000 E) 200,000; 200,000
The main source of profit for financial institutions is
a. their ownership of stocks in commercial corporations. b. their ownership of real assets received in foreclosures on loans to households. c. the fees charged for holding and servicing checking accounts. d. the difference between interest paid on deposits and interest received on loans. e. the difference between the cost of creating new money and the interest paid on loans.