Demand for a Good Will Always Rise When

question 261

Multiple Choice

Demand for a good will always rise when:

• A) the price of a complementary good falls.
• B) the price of a substitute good falls.
• C) tastes change.
• D) incomes decrease.
• E) the price of the good falls.

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Definitions:

Deposit Expansion Multiplier

The ratio of the amount by which deposits can increase to the original amount of new reserves; it shows how money multiplies in the banking system.

Reserve Ratio

This is the fraction of depositors' balances banks must have on hand as cash.

Discount Rate

The rate of interest applied to loans obtained by commercial banks and other saving organizations from the lending facility of their regional Federal Reserve Bank.

Government Bonds

Long-term debt of the federal government.