If the price elasticity of demand is elastic, then:
A. Ed < 1.
B. consumers are relatively not very responsive to a price increase.
C. an increase in the price will increase total revenue.
D. there are likely a large number of substitute products available.
Answer: D
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Suppose a bank is exactly meeting its desired reserve ratio of 10 percent and a new deposit of $75,000 is made. Immediately after the deposit is made, the bank's excess reserves equal
A) zero. B) $7,500. C) $67,500. D) It is impossible to determine without additional information.
The aggregate demand curves in Figure 13.1 have a positively-sloped portion. The reason this can happen is ________
A) sloppy editing B) the monetary policy response to declining inflation causes the real interest rate to fall, which causes output to rise C) a sudden increase in potential output D) changes in expected inflation cause the real interest rate to change in the opposite direction E) rising inflation causes financial frictions to increase