When universities announce a large tuition increase and follow it with an announcement that more financial aid will be available, they are assuming that students who pay full tuition:
A. have elastic demand and students who use financial aid have inelastic demand.
B. have inelastic demand and students who use financial aid have elastic demand.
C. view a college education as a normal good and students who use financial aid view it as an inferior good.
D. view a college education as an inferior good and students who use financial aid view it as a normal good.
Answer: B
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A change in the reserve requirement is the tool used least often by the Fed because it:
A. Does not affect bank reserves. B. Can cause abrupt changes in the money supply. C. Does not affect the money multiplier. D. Has no impact on the lending capacity of the banking system.
The real quantity of money is
A) inversely related to GDP. B) measured in current dollars. C) inversely related to the price level. D) measured in constant dollars.