Using Scenario 1 what would happen to your budget constraint if you came up with a study technique that allowed you to earn 3 points for every hour spent studying economics and still only 2 points for every hour spent studying French? What has
happened to the relative price of one hour of studying French?
The budget constraint would pivot out. The relative price of studying French would actually rise since every hour you spend studying French is costing your 3 points towards your economics grade rather than the previous 2 points.
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Suppose there was an unexpected increase in aggregate demand. We would expect to observe
A) frictional unemployment to increase. B) the duration of unemployment and the amount of unemployment to decrease. C) higher wages, with the duration of unemployment and the amount of unemployment unchanged. D) a decrease in aggregate demand.
The origin of the Phillips curve is the idea that an increase in
a. AD will lead to more inflation and more unemployment. b. AD will lead to more inflation and lower unemployment. c. AS will lead to lower inflation and lower unemployment. d. AS will lead to less inflation and higher unemployment.
When we say that money is fungible, we mean that a dollar spent out of your savings account:
A. is earmarked for a purpose and can't be spent on everyday expenses like groceries. B. is exactly the same as a dollar spent from your checking account. C. is not substitutable with any other dollar you have. D. is worth more than the dollar you have in your pocket.
As a person's wealth increases we would expect the demand for money to:
A. decrease. B. not change; money demand does not vary with wealth, only with income. C. increase dollar for dollar with wealth. D. increase but at a rate less than dollar for dollar.