Utility is maximized when the chosen bundle of goods satisfies the equimarginal rule and when the chosen bundle is on the budget line.
Answer the following statement true (T) or false (F)
True
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Suppose that the Fed decides to decrease the money supply by 0.87 percent. If the velocity of money is constant, then the quantity theory of money predicts that:
a. nominal GDP will remain unchanged. b. the quantity of output will rise by 0.87 percent. c. nominal GDP will fall by 0.87 percent. d. the price level will fall by 0.87 percent. e. real GDP will fall by 0.87 percent.
Which of the following will lower the interest rate and increase investment spending?
a. An increase in the demand for loanable funds b. A decrease in the demand for loanable funds c. An increase in the supply of loanable funds d. A decrease in the supply of loanable funds e. An equal and simultaneous decrease in the demand for and supply of loanable funds
Monetary policy refers to the actions the Federal Reserve takes to manage
A) the money supply and income tax rates to pursue its economic objectives. B) government spending and income tax rates to pursue its economic objectives. C) income tax rates and interest rates to pursue its economic objectives. D) the money supply and interest rates to pursue its economic objectives.
If Indiana has an absolute advantage over Maine in producing both corn and ball bearings, then
a. Indiana should produce both corn and ball bearings b. there are no benefits possible from specialization c. Maine should produce ball bearings and Indiana should produce corn d. Indiana should produce ball bearings and Maine should produce corn e. they still may benefit from specialization, but more information is needed to determine which state should specialize in each