Nowadays, most observers believe that monetary policy
A. is less important than fiscal policy.
B. is more important than fiscal policy.
C. and fiscal policy are equally important.
D. and fiscal policy are both unimportant.
Answer: B
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Suppose there are only two people, Mr. Mullinax and Ms. Fleming, who must split a fixed income of $500. For Mr. Mullinax, the marginal utility of income is MU m = 600 - 2I m , while for Ms. Fleming, marginal utility is MU f = 600 - 3I f , where I m and I f are the amounts of income to Mr. Mullinax and Ms. Fleming, respectively.
(A) What is the optimal distribution of income if the social welfare function is additive? (B) What is the optimal distribution if society values only the utility of Ms. Fleming? What if the reverse is true? Comment on your answer. (C) Finally, comment on how your answers change if the marginal utility of income for both Mr. Mullinax and Ms. Fleming is constant such that Mu m = 250 = MU f . (This one is subtle.) The setup should be I m + I f = 500 and 600 - 3I f = 600 - 2I m
Refer to the above figure. The figure represents the saving function for the consumer. Point B represents
A. the amount of autonomous consumption. B. a situation in which saving is positive. C. a situation in which saving is negative. D. the point at which saving equals zero.
Which one of these countries has not adopted the euro?
A. Germany B. France C. Italy D. England
Competitive firms will always try to earn more than a normal profit by doing the following, except:
A. Adopting better production technology B. Improving their business organization and operation C. Developing new products D. Raising the prices of their existing products