The utility from a specific product is:
A. Determined by a consumer's income
B. Determined by the price of the product
C. A measure of one's preference or taste for it
D. Constant as one consumes more units of it
C. A measure of one's preference or taste for it
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If the current unemployment rate is 5%, under which of the following circumstances would you expect the Fed to use contractionary monetary policy?
A) if the inflation rate is above 5% B) if the inflation rate is below 5% C) if the natural rate of unemployment is below 5% D) if the natural rate of unemployment is above 5%
Show graphically and explain why targeting an interest rate is preferable when money demand is unstable and the IS curve is stable
What will be an ideal response?
Which of the following statements is true of rational expectations?
A) Rational expectations forecasts are always correct. B) For a trader with rational expectations, the expectation of an asset's price equals the optimal price forecast. C) If traders have rational expectations, any announcement by a company will have an effect on its stock price, even if the market was already aware of the facts being announced. D) If a trader really has rational expectations, he or she was always earn a greater than normal return on his or her financial portfolio.
The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.