Along an indifference curve, as the consumer reduces the quantity of Good A in favor of more Good B the marginal rate of substitution of Good A for Good B will
A. fall.
B. fall and eventually turn negative.
C. stay the same.
D. rise.
Answer: A
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National debt decreases in a given year when a country has
A) a budget deficit. B) a balanced budget. C) a budget supplement. D) a budget surplus. E) no discretionary fiscal policy.
Assuming the Fed is following the Taylor Rule, if inflation is 3 percent, target inflation is 2 percent, and output is 1 percent above potential, what would you predict would be the Fed funds rate target?
A. 5 percent B. 5.5 percent C. 4 percent D. 6 percent
Refer to the above figure. The above figure shows the cost structure of a firm producing an information product. Which curve represents average total cost?
A. Any of the 3 could be ATC. B. Curve 1 C. Curve 2 D. Curve 3
Research on the effects of recessions on the real level of GDP shows that
A. recessions cause only temporary reductions in real GDP, which are offset by growth during the expansion phase. B. recessions cause both temporary and permanent declines in real GDP, but most of the decline is temporary. C. recessions cause both temporary and permanent declines in real GDP, but most of the decline is permanent. D. recessions cause large, permanent reductions in the real level of GDP.