Author Question: If the demand for apples is highly elastic and the supply is highly inelastic, then if a tax is ... (Read 56 times)

CharlieWard · **on:** Jun 30, 2018

If the demand for apples is highly elastic and the supply is highly inelastic, then if a tax is imposed on apples it will be paid:
a. largely by the sellers of apples.
b. largely by the buyers of apples.
c. equally by the sellers and buyers of apples.
d. by the government.

Question 2

Why is the change in reserve requirement not frequently used to control the supply of money?

peter · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

a

Answer to Question 2

Though reserve requirement change can be very powerful tool for controlling supply of money it is seldom used. This is because a small reduction in the reserve requirement can make a huge change in the number of dollars that are in excess reserves in banks all over the country which can disrupt the whole economy. Frequent changes in the reserve requirement would also make it difficult for banks to plan.