What factor might lead to the opening of several new pizzerias in a town?
(A) The supply of pizza is inelastic.
(B) The price of a slice of pizza has gone up.
(C) The price of a slice of pizza has gone down.
(D) The cost of producing pizza has doubled.
Ans: (B) The price of a slice of pizza has gone up.
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Assume the economy is closed and that it is operating at full employment. Which statement is TRUE when the size of the budget deficit decreases?
A) The increased amount of public goods will crowd out privately produced goods. B) A reduction in the growth of productivity, and a reduction in society's standard of living will occur. C) The interest rate will decrease, leading to an increase in investment and capital formation. D) Demand and supply of credit will increase.
The fraction of deposits banks are required to keep as reserves is called the:
A) deposit requirement. B) reserve requirement. C) excess reserve requirement. D) none of the above.