Suppose tastes are NOT monotonic anywhere. Then diminishing MRS is not consistent with convexity of tastes.
Answer the following statement true (T) or false (F)
True
Rationale:
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The multiplier effect
A) explains what causes an expansion. B) has no impact on equilibrium expenditure. C) reinforces the negative effects of any reduction in spending. D) explains what causes a recession. E) explains how the economy recovers from a recession.
Which of the following will increase the money supply?
A) increasing the required reserve ratio B) an open market sale C) raising the discount rate relative to the federal funds rate D) none of the above
A monopoly:
A. can increase price and increase output at the same time. B. can charge any price it wants and still sell all of its output. C. can sell any output it produces provided it accepts the market price. D. must lower price in order to increase output.
Banks do NOT need to keep all of their deposits on hand as reserves because
A. they can always generate new reserves through the money creation process. B. only a fraction of deposits are withdrawn at any one time. C. FDIC protects banks from excessive withdrawal demands. D. there is too much risk of bank robberies.