Figure 7.5
The consumer must decide how to split $20 between spending and saving.Refer to Figure 7.5. If the consumer is subject to present bias, he/she will maximize utility at a marginal utility per dollar of ________ utils for consumption and ________ utils for saving.
A. 15; 15
B. 15; 30
C. 30; 15
D. 30; 30
Answer: A
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An inefficient manufacturing base is likely to result when:
a. only those goods are produced in which the domestic economy has a comparative advantage. b. a newly developing economy has no international trade controls. c. competitive foreign imports are restricted. d. the economy produces only those goods in which it has technical expertise. e. producers compete solely on the basis of low cost.
If the typical firm in a perfectly competitive market is earning positive economic profits then which of the following would be expected to happen?
a. Firms will exit the market. b. New firms will enter the market. c. There will be neither entry nor exit in this market. d. There will soon be a depression in the market.
Which statement is true?
A. Subsidy payments to farmers were almost completely phased out in 2007. B. The so-called new economy of the 1990s was neither new, nor very different from the economy of the previous 25 years. C. Until the time of the Great Depression, the United States was primarily an agricultural nation. D. There were no recessions during the presidency of Bill Clinton (January 1993-January 2000).
Which of the following is a drawback of a floating exchange-rate system?
A. Adverse foreign trade shocks are especially damaging since any intervention by the central bank adds to the recession. B. Overshooting of exchange rates may cause excessive resource shifts into and out of trade-oriented industries. C. Inflation is fully transmitted from one country having a higher rate of inflation to another one having a lower rate. D. Monetary policy is ineffective in raising aggregate demand since it cannot be directed toward achieving internal balance.