The first Pepsi yields Craig 18 units of utility and the second yields him an additional 12 units of utility. His total utility from three Pepsis is 38 units of utility. The marginal utility of the third Pepsi is:
A. 26 units of utility.
B. 6 units of utility.
C. 8 units of utility.
D. 38 units of utility.
Answer: C
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An adverse supply shock would cause the FE line to
A) shift to the right. B) shift to the left. C) remain unchanged. D) remain unchanged if the shock is temporary; shift to the right if the shock is permanent.
Exiting from a peg is relatively ____ compared with exiting from a common currency, which would be ____.
A) difficult; impossible B) easy; more difficult and costly C) complex; simple D) rare; much more common
Suppose that John allocates $10,000 of his disposable income for necessities. Any additional income beyond that is both spent and saved. Assume he has a disposable annual income of $50,000 and an MPC=0.8. Based on this information the additional amount spent on non-necessities should be:
A. $10,000. B. $40,000. C. $35,000. D. $32,000.