When a product's price increases from 800 to 1,200, the quantity ...

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When a product's price increases from 800 to 1,200, the quantity demanded decreases from 11,000 to 9,000 . Based on this information, the price elasticity of demand (in absolute terms) is estimated to be equal to:
 a. 0.5.
 b. 2.0.
 c. 0.25.
  d. 4.0.

Question 2

Suppose you found 3,000 hidden in your closet and deposited it in a demand deposit account at your bank. If the reserve requirement was 40 percent, the deposit would directly create ____ in excess reserves and ultimately lead to a ____ total increase in the money supply, if all banks in the system lend out 100 percent of their excess reserves.
 a. 1,800; 7,500
  b. 1,800; 5,400
  c. 3,000; 7,500
  d. 3,000; 3,000

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Answer to Question 1

a

Answer to Question 2

a

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