If marginal utility declines but remains positive, then
A) total utility continues to increase but at a decreasing rate.
B) total utility also declines.
C) total utility continues to be zero.
D) none of the above.
Answer: A
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When the Fed wishes to reduce the economy's money supply, it
a. lowers the discount rate b. lowers the legal reserve requirement c. reduces the margin requirement d. sells some of its government securities e. prints more money
Suppose that the government decreases its expenditures on goods and services. Within the AS-AD model, the result will be __________ in real GDP and __________ in the price level.
a) an increase; an increase b) an increase; a decrease c) a decrease; and increase d) a decrease; a decrease
A possible solution to the problems of external benefits is
A. to restrict the amount of the good through direct government regulation. B. to tax those receiving the extra benefits. C. production of the good by government. D. effluent fees.
A good economic model
A) describes every aspect of the economic world, with no exception. B) includes all those features of the world that can be described numerically. C) includes only those features of the world that are needed for the purpose at hand. D) should not include more than two variables.