When John earned $65,000 he purchased 10 DVDs a year. His income has just increased to $68,000 and he plans to purchase 15 DVDs this year. John's income elasticity of demand equals

During inflationary periods

a. all prices rise at the rate of inflation. b. real wages must necessarily decline. c. some prices may fall. d. relative prices do not change.

Bank lending and deposits tend to change as interest rates change. Can the Fed counteract this tendency?

a. Yes, through its ability to affect the money supply. b. Yes, through its ability to change tax levels. c. No, the Fed is forbidden by the Constitution from intervening in the economy. d. No, the Fed almost always follows a passive monetary policy.