If the Supply Curve of a Good Is Vertical, Then

question 14

Multiple Choice

If the supply curve of a good is vertical, then the elasticity of supply is:

• A)equal to zero.
• B)equal to one.
• C)greater than one but less than infinity.
• D)equal to infinity.
• E)less than one.

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Definitions:

Federal Reserve Board

A central body of the Federal Reserve System, overseeing the nation's monetary policy and regulating banks.

Deposit Expansion Multiplier

The deposit expansion multiplier refers to the ratio of the amount of money banks can create in the form of checkable deposits to the amount of reserves they hold.

Reserve Ratio

The fraction of deposits that banks are required to hold in reserve and not lend out, set by central banks to control the money supply and banking stability.

Depository Institutions Deregulation and Monetary Control Act

A U.S. federal law enacted in 1980 aimed at improving the Federal Reserve's control over monetary policy, deregulating certain aspects of the banking industry.