Gigantic State University Raises Tuition for the Purpose of Increasing

question 204

Multiple Choice

Gigantic State University raises tuition for the purpose of increasing its revenue so that more faculty can be hired.GSU is assuming that the demand for education at GSU is

• A)decreasing.
• B)relatively elastic.
• C)perfectly elastic.
• D)relatively inelastic.Difficulty: 02 Medium

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Definitions:

Reserve Ratio

The portion of depositors' balances that banks must have on hand as cash.

Bank Leverage

The ratio of a bank's total debt to its equity capital, indicating the extent to which bank funding is used to finance its assets.

Bank Insolvency

A condition where a financial institution's liabilities exceed its assets, rendering it incapable of meeting its obligations.

Required Reserve Ratio

The fraction of deposits that banks are required to keep on hand as reserves, either in their vaults or on deposit at a central bank.