Suppose a consumer spends his income on CDs and DVDs. If his income decreases, the budget constraint for CDs and DVDs will
a. shift outward, parallel to the original budget constraint.
b. shift inward, parallel to the original budget constraint.
c. rotate outward along the CD axis because he can afford more CDs.
d. rotate outward along the DVD axis because he can afford more DVDs.
b
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The total demand for goods and services at a given price level is also known as
A) autonomous consumption. B) the consumption function. C) equilibrium output. D) planned expenditures.
Which statement is true?
A. The Federal Reserve buys nearly all its United States government securities directly from the Treasury. B. Open market operations are the buying and selling of United States government securities in the open market by the Federal Reserve. C. The least important policy tool used by the Federal Reserve to control the money supply is open market operations. D. None of the choices/statements are true.
If the demand for a monopoly's output shifts rightward, the change in quantity produced is
A) positive. B) negative. C) zero. D) not predictable.
A firm is currently producing at the point where MC = MR. The situation for the firm at this point is P = $5, Q = 100, ATC = $6, AVC = $5.50. What do you recommend this firm do?
A) Increase production above the current output rate, because MC = MR at this rate of output. B) Continue to produce the current output rate, because P > AVC. C) Shut down, because AVC > P. D) Shut down, because ATC > P.