Consider the budget constraint between "spending today" on the horizontal axis and "spending a year from today" on the vertical axis. Suppose that you have $100 today and expect to receive $100 one year from today. Your money market account pays an annual interest rate of 25%, and you may borrow money at that interest rate. Suppose now that the interest rate decreases to 10%. What happens to the
slope of your budget constraint relative to when the interest rate was 25%? The slope
a. becomes steeper.
b. becomes flatter.
c. doesn't change because the budget constraint shifts in parallel to the original budget constraint.
d. doesn't change because the budget constraint shifts out parallel to the original budget constraint.
b
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Which of the following statements is a normative statement?
A) Military spending as a percent of government spending decreased by 5 percent in the 1990s. B) Every American household should have health care insurance coverage. C) Welfare reform has decreased the amount the government spends on welfare. D) Fewer people are unemployed this year than last year. E) The price of computers fell last year.
A firm has the production function 
. The wage rate is $10 per unit of labor and the rental rate is $5 per unit of capital and the firm is going to spend $1000 on production.
i. Assuming that the firm is free to choose any level of K and L to emply, how much of each should it emply? How much output will they produce? ii. Now assume that once the firm has chosen its level of L and K, the level of K becomes fixed. If the price of K increases to $8 per unit, how many units of output can the firm now produce if it spends the same amount? iii. Once the firm reaches the long run again and is able to vary its level of K, how much should L and K should it employ in order to achieve its original level of output? How much will that level of production cost?
If a consumer is spending all of his/her income in a manner where MUa / Pa = MUb / Pb, then the consumer:
a. should increase the consumption of A and decrease the consumption of B. b. is maximizing his/her utility. c. should increase the consumption of B and decrease the consumption of A. d. should increase the consumption of both A and B. e. should decrease the purchases of both A and B.
The labor force does not include people in the working-age population who are:
A. employed. B. not actively trying to find a job. C. retired, a full-time student, or stay-at-home parent. D. employed part time.