The long-run effect of an increase in the money supply is to
A. increase the price level.
B. decrease the interest rate.
C. decrease the price level.
D. increase the interest rate.
Ans: A. increase the price level.
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Suppose there are only two people, Mr. Mullinax and Ms. Fleming, who must split a fixed income of $500. For Mr. Mullinax, the marginal utility of income is MU m = 600 - 2I m , while for Ms. Fleming, marginal utility is MU f = 600 - 3I f , where I m and I f are the amounts of income to Mr. Mullinax and Ms. Fleming, respectively.
(A) What is the optimal distribution of income if the social welfare function is additive? (B) What is the optimal distribution if society values only the utility of Ms. Fleming? What if the reverse is true? Comment on your answer. (C) Finally, comment on how your answers change if the marginal utility of income for both Mr. Mullinax and Ms. Fleming is constant such that Mu m = 250 = MU f . (This one is subtle.) The setup should be I m + I f = 500 and 600 - 3I f = 600 - 2I m
When the economy moves from point D to E in Table 0201A, the opportunity cost of the computer in terms of televisions is A) 3. B) 4. C) 2. D) 5.
In 2003, the WTO ruled that U.S. tariffs on ________ were unfair and allowed retaliatory tariffs on U.S. products.
A. diamonds imported from South Africa B. beef imported from Argentina C. steel imported from the EU D. automobiles imported from Japan
If the consumer price index falls from 120 to 116 in a particular year, the economy has experienced:
A. inflation of 4 percent. B. inflation of 3.33 percent. C. deflation of 3.33 percent. D. deflation of 4 percent.