Total utility will be at its maximum when
A. marginal utility is negative.
B. marginal utility is positive.
C. marginal utility is maximized.
D. marginal utility is zero.
Answer: D
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Which of the following statements is true of the federal funds market?
A) No banks are refused loans in the federal funds market. B) Although the federal funds market aims to provide liquidity to needy banks, it is not very popular as overnight loans are logistically inefficient for large banks. C) In the federal funds market, banks with a shortage of reserves borrow funds, while banks with an excess of reserves lends them out. D) The interbank lending system works more efficiently in periods of financial panic than in periods of financial stability.
When borrowing is done in a foreign currency and lending is done in the domestic currency, what event creates a downturn in the economy?
a. a deprecation of its exchange rate b. an appreciation of its exchange rate c. an appreciation of its interest rate d. a depreciation of its interest rate
If a consumer is choosing the optimal combinations of two goods X and Y, and then the price of good Y decreases, this causes
a. MU/P of good X to increase, so the consumer now should buy more X to find a new optimal combination b. demand for good X to increase c. MU/P of good Y to increase, so the consumer now should buy more Y to find a new optimal combination d. MU/P of good Y to decrease, so the consumer now should buy more Y to find a new optimal combination e. the demand for good X and good Y will not change because utility does not depend on price
Average fixed cost
A. decreases steadily as output increases. B. increases steadily as output increases. C. exhibits diminishing returns. D. is a horizontal line.