Refer to the following graph. If the price of bagels falls, the budget constraint in the graph will rotate:
A. out and become flatter.
B. in and become steeper.
C. in and become flatter.
D. out and have the same slope.
Answer: A
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The possibility for recipients of funds in foreign countries to engage in riskier behavior after receiving financing is called
A) inequitable financing. B) moral hazard. C) adverse selection. D) asymmetric information.
Aunt Rose owned a dress shop on 81st Street and Broadway in Manhattan, selling limited-edition dresses to wealthy clients. One day, her landlord tripled her rent. What effect would this have on her dress price in the short run, assuming she is following the rules of profit maximization?
When an expansionary fiscal policy increases market interest rates and lowers gross private investment in an economy, it is called the: a. countercyclical effect. b. policy lag effect
c. multiplier effect. d. crowding out effect.
An open-market purchase of foreign bonds to increase a central bank's international reserves:
A. increases the central bank's liabilities and decreases its assets. B. increases the central bank's liabilities and assets. C. decreases the central bank's assets and liabilities. D. increases the central bank's assets but decreases its liabilities.