Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit. Table 19.3Michael's Utility ScheduleUnits of ColaTU of ColaMU of ColaUnits of PretzelsTU of PretzelsMU of Pretzels14040130302 322 2039624366164112 478 5124 584 Refer to Table 19.3. If Michael has $40 to spend on cola and pretzels, what is his maximum utility possible?
A. 190.
B. 40.
C. 208.
D. 174.
Answer: D
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The CPI is a measure of the:
A. average level of prices relative to prices in the base year. B. price of a specific good or service. C. rate of inflation. D. real wage.
In the above figure, the firm will produce
A) 0 units. B) 5 units. C) 15 units. D) 20 units.
Proponents of zero inflation argue that a successful program to reduce inflation
a. eventually reduces inflation expectations. b. eventually raises real interest rates. c. permanently decreases output. d. permanently raises unemployment.
To offset the indirect crowding-out effects, a government engaging in expansionary policy aimed at eliminating a recessionary gap could
A. reduce taxes rather than increase government spending. B. both reduce taxes and reduce spending to be able to achieve full employment. C. increase spending more than the simplest Keynesian model would predict. D. increase spending less than the simplest Keynesian model would predict.