According to the theory of utility maximization,
a. people who buy tap water apparently feel the additional benefit (compared with bottled water) offsets the additional cost
b. people who buy bottled water apparently feel the additional benefit (compared with tap water) offsets the additional cost
c. the marginal utility of the last gallon of bottled water consumed exceeds the marginal utility of the first gallon of tap water consumed
d. the marginal utility of bottled water exceeds the marginal utility of diamonds
e. bottled water must be more expensive (per gallon) than tap water
B
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If the current account balance is -$450 billion, the capital and financial account balance is $440 billion, then the official settlements balance is
A) $890 billion. B) $0 because it is always zero. C) $10 billion. D) -$890 billion. E) -$10 billion.
Borrowing in foreign currencies to spend or invest domestically,
a. decreases demand for the domestic currency, appreciating the domestic currency b. increases demand for the domestic currency, depreciating the domestic currency c. increases demand for the domestic currency, appreciating the domestic currency d. does not affect the exchange rates
If the cost of buying an identical basket of goods in country A is greater than country B: a. People will tend to sell currency from country A and buy currency from country B
b. The prices of those baskets of goods will tend to converge. c. If the goods in the baskets are internationally traded, the tendency for prices to converge will be stronger. d. All of the above are true.
Automatic stabilization occurs
A) when the Congress makes changes to transfer payment programs. B) because monetary policy is effective. C) because government purchases fluctuate with real GDP. D) because taxes and transfer payments fluctuate with real GDP.