When the price of a cup of coffee falls from $3.00 to $2.50, the quantity demanded increases from 1,000 per month to 1,150 per month. Using the midpoint method, the price elasticity of demand is

If the Fed wanted to use open market operations to reduce interest rates, it would:

A. buy T-bills from banks. B. sell T-bills to banks. C. issue T-bills on behalf of banks. D. grant banks permission to issue T-bills.

When banks reduce the reserve ratio, the potential money multiplier

A) increases. B) decreases. C) remains unchanged. D) sometimes increases, and sometimes decreases depending on the rate of inflation.