Refer to the graph shown.
Assuming a consumer has $5 to spend, if a soda costs $0.25 and a chocolate bar costs $0.50, the consumer will optimally choose to consume:
A. 0 cans of soda and 10 chocolate bars.
B. at point A.
C. at point B.
D. 20 cans of soda and 0 chocolate bars.
Answer: B
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Mel's utility of wealth is 130 units at $3,000, 160 units at $5,000, and 190 units at $9,000. Starting from zero wealth, he must choose between options A and B
Option A gives him $5,000 for sure. Option B gives him $3,000 with probability 0.4 or $9,000 with probability 0.6. Mel A) will choose A. B) will choose B. C) is indifferent between A and B. D) needs more information to make a choice.
How might fiscal policy be used to correct an inflationary gap?
A) The exchange rate would be adjusted to encourage imports. B) The exchange rate would be adjusted to discourage imports. C) The interest rate would be adjusted to encourage saving. D) Taxes would be increased to reduce aggregate demand.
Marginally attached workers are people who are
a. looking for a better job than they currently have. b. not working and are not looking for work, but would work if asked. c. working part-time while they go to school or get training for a better job. d. only a few years from retirement.
Bank depositors will not lose their deposits in a banking panic if:
A. the actual reserve-deposit ratio equals the desired reserve-deposit ratio. B. there is 100 percent reserve banking. C. there is a central bank. D. there is fractional reserve banking.