Before an uneven rise in prices Allan consumed 5 bread and 6 juice. After the price increase and with an increased welfare payment from the government Allan consumes 4 bread and 7 juice. Does the government payment represent a true cost-of-living adjustment (COLA)?
A) Yes, if the two consumption bundles lie on the same indifference curve.
B) Yes, if the second bundle yields more utility than the first.
C) No, the first bundle is clearly preferred.
D) Not enough information.
A
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Natural monopolies have U-shaped cost curves.
A. True B. False C. Uncertain
If the prices of all goods increase by the same proportion as income, the quantity demanded of good X will
a. decrease. b. increase. c. remain unchanged. d. change in a way that cannot be determined from the information given.
The goal of contractionary monetary policy is to:
A. reduce interest rates to stimulate the economy. B. increase interest rates to stimulate the economy. C. reduce interest rates to slow down the economy. D. increase interest rates to slow down the economy.
A woman gives her boyfriend a birthday present. The gift could be viewed by the boyfriend as a
a. moral hazard problem. b. screening device. c. signal of how much she cares for him. d. All of the above are correct.