The point where the budget constraint and an indifference curve are tangent
A. Indicates profit maximization.
B. Represents the optimal consumption point.
C. Represents maximum total revenue.
D. Indicates the optimal level of production.
Answer: B
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If the Fed purchases securities worth $10 million from a commercial bank, the banking system's balance sheet will show
A) an increase in securities held of $10 million and an increase in bank reserves of $10 million. B) an increase in securities held of $10 million and a decrease in bank reserves of $10 million. C) a decrease in securities held of $10 million and an increase in bank reserves of $10 million. D) a decrease in securities held of $10 million and a decrease in bank reserves of $10 million.
If population is expanding at the same rate as a country's real output: a. real per capita output would increase
b. real per capita output would remain unchanged. c. the production possibilities curve for the country as a whole will be shifting outward. d. both (b) and (c) would be true.
Recessions typically last longer than expansions
a. True b. False
Some modern theories of consumer behavior have:
A) emphasized that consumption is basically an instantaneous act. B) contended that in the MUx/Px = MUy/Py equation MU is understated for time-intensive goods. C) introduced the opportunity cost of time as a component of product price. D) argued that inflationary expectations negate the theory of consumer behavior.