Monetary policy to cure inflation might include
A. An increase in automatic stabilizers.
B. An increase in the discount rate.
C. The purchase of securities in the open market by the Fed.
D. A decrease in discretionary spending.
Answer: B
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If, for the last bushel of apples produced and sold by an apple farm marginal revenue exceeds marginal cost, then in producing that bushel the farm
A) added an equal amount to both total revenue and total cost. B) added more to total cost than it added to total revenue. C) maximized its profits or minimized its losses. D) added more to total revenue than it added to total cost.
The extent to which investment spending changes with changes to income is called the:
A) marginal propensity to consume. B) marginal propensity to save. C) marginal propensity to import. D) marginal propensity to invest.
Assume a firm sells two complementary products. Bundling is more likely to be a successful price discrimination strategy when one group of customers is willing to pay a higher price for one of the items in the bundle and another group is willing to
pay a higher price for the other item. Indicate whether the statement is true or false
The principle of revealed preference would say that if Xavier chooses market basket A over market basket B then:
A) if A is more expensive than B, then Xavier must prefer A over B. B) if A is more expensive than B, then Xavier must prefer B over A. C) if A is less expensive than B, then Xavier must prefer A over B. D) if A is less expensive than B, then Xavier must prefer B over A.