Refer to the information provided in Figure 6.1 below to answer the question(s) that follow.
Figure 6.1Refer to Figure 6.1. Assume Tom is on budget constraint AC and the price of a hamburger is $4.00. Tom's monthly income is
A. $20.
B. $60.
C. $80.
D. $100.
Answer: C
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What will be an ideal response?
If the Treasury finances an expenditure by borrowing from the Fed, the money supply
A) and bank reserves fall. B) and bank reserves rise. C) rises while bank reserves remain unchanged. D) remains unchanged as bank reserves rise.
When there is an increase in demand,
a. the demand curve shifts toward the origin of the graph. b. the demand curve twists clockwise. c. the demand curve shifts away from the origin of the graph. d. the demand curve twists counterclockwise. e. a lower price has increased the amount of the good that consumers will buy.
If you were to behave according to the rational choice model when confronted with a loss of $25 on the same day in which you receive an unexpected gift of $25 you would
A. value the gift of $25 more than the loss of $25. B. value the loss of $25 more heavily than the gift of $25. C. see the two events as exactly offsetting and thereby of no consequence in your overall welfare. D. discount the loss and value the gain so that you feel you have gained welfare.