A consumer who has spent all of her income on clothes and food and finds that her marginal-utility-to- price ratio is higher for clothes than for food should, in the future, rearrange purchases to maximize total utility by
a. purchasing more food and less clothes
b. purchasing more of both commodities
c. purchasing more clothes and less food
d. purchasing less of both commodities
e. paying closer attention to the law of diminishing marginal utility for both commodities
c. purchasing more clothes and less food
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A lender of last resort
A) makes loans when no one else will. B) makes loans without regard for risk. C) is a firm that is forced to make loans for its own survival. D) Both A and B. E) None of the above.
When an economy is in an economic boom, discretionary fiscal policy would call for _____________, and the automatic stabilizers would _____________.
A. lowering tax rates; lower tax revenues B. lowering tax revenues; lower tax rates C. increasing tax rates; increase tax revenues D. increasing tax rates; lower tax revenues
If an excise tax is imposed on a good or service,
a. the supply curve shifts upward b. the supply curve shifts downward c. the price paid by consumers decreases d. the net price received by sellers increases e. the quantity produced and sold increases
Unemployment insurance reduces hardships of unemployment but also increases the amount of structural unemployment
a. True b. False Indicate whether the statement is true or false