The price system rations goods among consumers in such a way that
A. all are treated equally.
B. all needs are satisfied.
C. the rich are favored.
D. important needs are satisfied first.
Answer: C
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If real GDP is less than nominal GDP and prices have not changed from the base-year prices, then production must have declined
Indicate whether the statement is true or false
If the marginal utility of a gallon of milk to consumers is $2.50 and the MC of producing the gallon of milk is $1.50, then
a. the value of the resources used up in producing one more gallon of milk would be $1 less than the money value of the additional gallon to consumers. b. society could be made better off by expanding the output of milk. c. resources are not being used most efficiently. d. All of the above are true.
Suppose the company that owns the vending machines on your campus has doubled the price of a can of soda. If they then still sell almost the same number of sodas per day, this suggests:
A. soda purchases represent a large fraction of students' budgets. B. there are few other places to purchase soda on campus. C. the price elasticity of demand for soda is equal to 1. D. students do not have good nutritional information.
Suppose that income taxes are increased by $600 billion. If the marginal propensity to consume is 0.75 and the spending multiplier is 4, by how much will the aggregate demand curve shift at a given price level?
A) $2,400 billion B) $1,800 billion C) $600 billion D) $450 billion