A utility function is a mathematical function that assigns values to consumption bundles to represent the:
A. consumer's income.
B. consumer's preferences.
C. marginal rate of substitution.
D. prices of the goods in the consumption bundle.
B. consumer's preferences.
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Which of the following best explains why the federal tax rebates in 2008 and 2009 had almost no effects on aggregate demand?
A) According to Ricardian equivalence theorem, those tax rebates did not affect aggregate demand because they were accompanied by more government spending. B) According to the permanent income hypothesis, those one-time tax rebates did not affect consumption because taxpayers did not believe the rebates would occur. C) According to Ricardian equivalence theorem, those tax rebates did not affect aggregate demand because there were no direct expenditure offsets. D) According to the permanent income hypothesis, those one-time tax rebates did not affect consumption because they did not change taxpayers' permanent income.
Under Gresham's law, the term bad money refers to:
a. money with no face value. b. illegal tender. c. devalued money. d. commodity money. e. money with low commodity value.
Total cost is
a. fixed cost plus variable cost b. irrelevant to decision making c. marginal cost plus fixed cost d. total product minus total input e. the additional cost associated with producing an additional unit
Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The GDP Price Index falls, and reserve-related (central bank) transactions become more negative (or less positive). b. The GDP Price Index falls, and reserve-related (central bank) transactions remain the same. c. The GDP Price Index and reserve-related (central bank) transactions remain the same. d. The GDP Price Index rises, and reserve-related (central bank) transactions remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.