The real-income effect refers to
A) the law of diminishing marginal utility.
B) the want-satisfying power of a good or service.
C) substitution of less expensive commodities for more expensive commodities.
D) the change in purchasing power when the price of a good changes.
Answer: D
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Which of the following is an ultimate objective of the Federal Reserve?
A) Real GDP growth B) M1 growth C) M2 growth D) Low interest rates
Suppose consumers save 17 percent of their incomes. If the government collects 10 dollar in taxes from each taxpayer and invested it in infrastructure, total social investment will ________ per taxpayer.
A. increase by $10.17 B. increase by $8.30 C. decrease by $1.70 D. decrease by $8.30
The marginal benefit of reducing pollution
A. Rises as the environment gets cleaner. B. Falls as the environment gets cleaner. C. Is not an issue in determining the optimal rate of pollution. D. Is constant.
Both Stan and Kyle own potato chip factories. Stan's factory has low fixed costs and high variable costs. Kyle's factory has high fixed costs and low variable costs. Currently, each factory is producing 5,000 bags of potato chips at the same total cost. Complete the following statement with the correct answer. If each produces
A. more, the costs of Kyle's factory will exceed those of Stan's factory. B. less, the costs of Kyle's factory will exceed those of Stan's factory. C. less, their costs will be equal. D. more, their costs will be equal.