Refer to the above table. The table gives the various combinations of Good A and Good B along Jane's indifference curve. The marginal rate of substitution when Jane goes from combination A to combination B is
A. 4:1.
B. 3:1.
C. 2:1.
D. 0.
Answer: A
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A) greater than; less than B) less than; equal to C) equal to; greater than D) greater than; greater than
Macroeconomic variables that the Fed cannot control directly but can influence fairly predictably, and which are related to the Fed's goals, are known as
A) instruments. B) tools. C) intermediate targets. D) initial targets.
The intertemporal budget constraint tells us that
A) the income earned in a lifetime will be evenly divided between consumption and saving. B) the present value of lifetime consumption equals the present value of lifetime income. C) household consumption is based on permanent income and not transitory income. D) consumption smoothing only occurs in years when income is greater than consumption.
Under which of the following conditions will the actual rate of unemployment tend to rise above the natural rate of unemployment?
a. Prices are stable and have been for the last four years. b. Inflation is 3 percent and was widely anticipated more than a year ago. c. Expansionary monetary policies lead to an unexpected increase in inflation from 3 percent to 7 percent. d. Restrictive monetary policies lead to an unexpected reduction in inflation from 6 percent to 2 percent.