You observed last week that the price of tomatillos was $4 per pound and that the total quantity of tomatillos consumed in Ames was 50 pounds. This week, you observe that the price of tomatillos increased to $6 per pound and the consumption decreased to 30 pounds. Based on your observations, calculate the elasticity of demand for tomatillos.

Suppose a bank has $100 million in checking account deposits with no excess reserves and the required reserve ratio is 10 percent. If the Federal Reserve reduces the required reserve ratio to 8 percent, then the bank can make a maximum loan of

A) $0. B) $2 million. C) $8 million. D) $10 million.

Which of the following is a possible cure for ongoing inflation?

a. The Fed could pursue anti-cyclical monetary policy. b. The Fed could increase money supply whenever the AD curve shifts to the right. c. The Fed could maintain a constant interest rate target regardless of economic circumstances. d. The Fed could always try to keep the unemployment rate below the natural rate. e. The Fed could pursue anti-cyclical fiscal policy.