Actual GDP will be below potential GDP:
A. when the economy is at full employment.
B. during an economic boom.
C. when resources are fully utilized.
D. during a recession.
Answer: D
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The law of diminishing marginal utility explains why
a. most individual demand curves are straight lines. b. the consumer's optimal purchase is at the tangency of an indifference curve and the budget line. c. most individual demand curves slope downward. d. marginal utility falls when total utility falls.
A decrease in the price of resources will cause the aggregate supply curve to
a. shift outward. b. shift inward. c. become flatter. d. become steeper.
Based on these graphs, in both cases _____.
a. RGDP increases
b. RGDP decreases
c. price level increases
d. price level decreases
In introducing the opportunity cost of time into the theory of consumer behavior, we find that, all else equal:
A. one should consume less of time-intensive goods. B. one should consume more of time-intensive goods. C. the consumer's equilibrium position is not altered. D. the marginal utility derived from each product must be multiplied by consumption time in determining equilibrium.