If food is measured on the horizontal axis of budget line diagram, and clothing is measured on the vertical axis, an increase in
a. the price of clothing will make the budget line steeper
b. income will make the budget line steeper
c. income will make the budget line flatter
d. the price of food will make the budget line steeper
e. the price of food will make the budget line flatter
D
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Constant returns to scale means that, given any constant x > 0
A) xzF(xK, xNd)= zF(xK, xNd). B) xzF(xK, xNd) > zF(xK, xNd). C) xzF(xK, xNd) < zF(xK, xNd). D) xzF(xK, xNd) = zxF(K, Nd).
Subprime mortgages are:
a. Mortgages loans to individuals who have lower credit ratings than would normally be approved by mortgage originators. b.Mortgage loans that were correctly underwritten but encountered problems in the securitization process. c. Mortgages that are healthy but not ready to be securitized. d. Mortgages that carry interest rates below the U.S. prime rate. e. None of the above.
Which one of the following is to be a tool of monetary policy for altering the reserves of commercial banks?
a. Unemployment rate b. Budget surplus or deficit c. Tax rate d. Discount rate
Suppose in 1992, the average price level in Pacifica was 100, and that in Atlantica it was also 100. In the foreign exchange market 1 Pacifica pound was exchanged for 1 Atlantica mark. In 2012, the price level in Pacifica had risen to 280 and the price level in Atlantica had risen to 360.a. According to the relative purchasing power parity (PPP) theory, what should the pound-mark exchange rate be in 2012?b. If the actual pound per mark exchange rate is 0.5 pound/mark in 2012, is the mark overvalued or undervalued relative to its PPP value?
What will be an ideal response?