If an individual's total utility from consuming two goods decreases, then there must be
A. a downward rotation of the individual's indifference curve.
B. an outward shift of the individual's indifference curve.
C. an inward rotation of the individual's indifference curve.
D. an inward shift of the individual's indifference curve.
Answer: D
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Debt equity swaps may lead to
(a) increased foreign ownership. (b) greater domestic inflation. (c) lower debt servicing requirements. (d) all of the above. (e) none of the above.
Why was the Fed reluctant to rescue insolvent banks?
A) It thought it may lead to moral hazard. B) It thought it may lead to adverse selection. C) It thought they were still liquid. D) It did not think they were insolvent.
The law of increasing opportunity costs states that as production of a particular good ____________, the opportunity cost of producing an additional unit ______________.
a. falls; rises b. rises; rises c. falls; remains constant d. rises; falls
Suppose the required reserve ratio is 0.20. Total bank deposits are $200 million and the bank holds $50 million in reserves. How much more money could the bank create if it does not hold excess reserves?
A. $25 million B. $50 million C. $5 million D. $30 million