The above table shows Priscilla's marginal utility from the two goods she consumes, pizza and Pepsi. Initially, a slice of pizza costs $4 and a can of Pepsi $2. Suppose Priscilla has $12 to spend
If the price of pizza falls to $2, Priscilla will choose to A) consume more pizza.
B) consume more Pepsi.
C) consume less pizza.
D) Both answers A and B are correct.
D
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Based on the figure above, as a result of international trade, U.S. domestic production ________ airplanes per year
A) decreases by 200 B) increases by 300 C) decreases by 100 D) increases by 500 E) increases by 200
The time lags, which must be either reduced or known with some precision if fiscal policy is to be an effective stabilizing technique, are the lags between
A) the beginning of a cyclical movement and its recognition. B) the decision that compensatory action should be taken and the enactment of tax or expenditure changes. C) the increase or decrease in net government receipts and their final effects on total spending. D) all of the above, because a significant miscalculation with respect to any of these lags could increase aggregate instability.
Many central banks around the world target an inflation rate of about ________, because of upward bias in measured inflation and to reduce the risk of deflation
A) -2%. B) 0%. C) 2%. D) 5%.
Suppose the government pursues expansionary fiscal policy by lowering taxes. What are the expected demand-side effects? What are the possible offsets to the demand-side effect? How might supply-side effects change these results?
What will be an ideal response?