As a result of a decrease in the price of online streaming movies, consumers download more movies online and buy fewer DVDs. This is an illustration of:

A. Consumer sovereignty
B. The income effect
C. The substitution effect
D. Diminishing marginal utility


Answer: C

Economics

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Which of the following is a Eurodollar claim?

A) A U.S.-dollar deposit by a London firm in a Kansas City bank B) A Swiss-franc deposit by a German firm in a Swiss bank C) A U.S.-dollar deposit by a New York firm in a London bank D) A Canadian-dollar deposit by a London firm in a Toronto bank

Economics

Refer to the following graph. If the price of bagels falls, the budget constraint in the graph will rotate:

A. out and become flatter. B. in and become steeper. C. in and become flatter. D. out and have the same slope.

Economics

The Federal Reserve will tend to tighten monetary policy when

a. interest rates are rising too rapidly.
b. it thinks the unemployment rate is too high.
c. the growth rate of real GDP is quite sluggish.
d. it thinks inflation is too high today, or will become too high in the future.

Economics

Marginal cost is the:

A. rate of change in total fixed cost that results from producing one more unit of output. B. change in total cost that results from producing one more unit of output. C. change in average variable cost that results from producing one more unit of output. D. change in average total cost that results from producing one more unit of output.

Economics