?Suppose the marginal utility of a unit of good x = MUx, the marginal utility of a unit of good y = MUy, Px= price of a unit of good x, and Py= price of a unit of a goo?d y. A utility-maximizing consumer who purchases two goods, x and y, allocates her budget in such a way that _____.
a. ?MUx = MUy
b. ?TUx/Py = TUy/Px
c. ?MUx/Px = MUy/Py
d. ?TUx = TUy
e. ?MUx/Py = MUy/Px
Ans: b. ?TUx/Py = TUy/Px
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A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
Which of the following is an example of a fiscal policy initiative?
a. Lowering of interest rates. b. Increase in reserve requirements. c. Reduction in taxes. d. Decrease in money supply.
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A. $10,000 B. $5,000 C. $40,000 D. $20,000
If we want to use a measure of inflation that foreshadows price changes before they affect prices at the retail level, we would base our measure of inflation on
A) the producer price index. B) the consumer price index. C) the GDP deflator. D) the household price index.