Indifference curves tend to be convex because ________
A) they are bowed inwards toward the origin
B) consumers dislike large fluctuations in consumption from one period to the next
C) of the gap between real and nominal interest rates
D) the marginal rate of substitution exceeds the price effect
B
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Blueland is passing through a recession. How can the government of Blueland use fiscal policy to improve the economic condition of the country?
What will be an ideal response?
If a firm anticipates that it is at a risk of being held up, it is more likely to
a. forgo the transaction completely b. merge with its trading partner c. exchange "hostages" d. All the above
The Fed's principal objective is to
a. make profits to pay into the U.S. Treasury. b. collect tax revenues. c. supervise the business decisions of banks. d. manage the money supply and interest rates.
Assume the central bank decides to pursue contractionary monetary policy. Where and how should you begin your analysis when analyzing the chain reaction of economic interactions?
a. Start the analysis in the real goods market with aggregate demand shifting to the left. b. Start the analysis in the real goods market with aggregate demand shifting to the right. c. Start the analysis in the real credit market with demand for real credit shifting to the left. d. Start the analysis in the real credit market with demand for real credit shifting to the right. e. Start the analysis in the real credit market with supply of real credit shifting to the left.