Use the following marginal benefit and marginal cost functions for activity A: MB = 100 - 5AMC = 20 + 3AThe optimal level of A is
A. 40
B. 20
C. 10
D. 0
E. 30
Answer: C
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Refer to the above figure. If real disposable income is less than $5,000, then saving is
A) negative. B) 0. C) positive. D) none of the above: cannot be determined with the given information.
A breakdown of financial markets can result in
A) financial stability. B) rapid economic growth. C) political instability. D) stable prices.
According to the substitution effect, if the price of a product goes down
A) the consumer will buy more of the good at the lower price than at a higher price, creating a downward sloping demand curve. B) the consumer will buy more of the good at a lower price than at a higher price, creating a horizontal demand curve. C) the consumer will not change the level of purchases of the good when the price changes, making the demand curve a vertical line. D) the real income of the consumer will increase, causing the consumer to want to buy more of the good, creating a downward sloping demand curve.
If everyone expects prices to fall but they do not, then
a. nothing happens. b. the IS curve shifts to the left and the AD curve shifts to the right. c. both IS and AD shift to the right. d. both IS and AD shift to the left. e. the IS curve shifts to the right, the AD curve shifts to the left.