The Cross-Price Elasticity of Two Goods Is -2

question 133

Multiple Choice

The cross-price elasticity of two goods is -2.This tells us that:

• A)the two goods are substitutes.
• B)the two goods are complements.
• C)the two goods are unrelated.
• D)the two goods are inelastic.

---

Definitions:

Depository Institution

A financial institution legally allowed to accept monetary deposits from consumers, such as banks and credit unions.

Required Reserve Ratio

The fraction of deposits that banks are required to hold in reserve, either in their vaults or at the central bank, to ensure that they can meet withdrawal demands.

Simple Money Multiplier

A formula that estimates the maximum amount of money that banking can generate with each dollar of reserves.

Required Reserve Ratio

The fraction of deposits that banks are required by law to keep on hand or with the central bank, rather than lend out.