In order for isoquants to have a diminishing marginal rate of substitution, they must be:
A. L-shaped.
B. vertical.
C. straight lines.
D. None of the statements is correct.
Answer: D
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Which of the above diagrams illustrate(s) the effect of an increase in incomes on the market for secondhand clothing?
A. A only B. B only C. C only D. B and C
An increase in the money supply typically leads to
A. a reduction in the velocity of money. B. an inward shift in money demand. C. a decrease in the price level. D. a reduction in the rate of interest.
One In the News article titled "Fed to Expand Bond-Purchase Program" suggests that interest rates
A. Decrease aggregate supply. B. Will rise to encourage less borrowing for home mortgages and other loans. C. Will fall to encourage more borrowing for home mortgages and other loans. D. Will rise to encourage more savings.