Which of the following must be true about functions in the duality picture:
A. The utility function is homogeneous of degree 1.
B. The indirect utility function is homogeneous of degree 1 in income.
C. The uncompensated demand functions are homogeneous of degree 1.
D. Both (a) and (b).
E. Both (b) and (c).
F. Both (a) and (c)
G. All of the above.
H. None of the above.
Answer: H
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Based on the model of the money market, if prices in the economy decrease, the equilibrium interest rate should
A) stay the same. B) increase. C) decrease. D) increase to the same extent that the supply of money increases.
Refer to Figure 13-4. Given the economy is at point A in year 1, what is the inflation rate between year 1 and year 2?
A) 0.9% B) 1.8% C) 2.7% D) 3.0%
The above figure shows the payoff to two gasoline stations, A and B, deciding to operate in an isolated town. Suppose a $30 fee is required to enter the market. If firm A chooses its strategy first, then
A) firm A will not enter. B) neither firm will enter. C) both firms will enter. D) firm A will enter and firm B will not.
Assume that your nominal wage was fixed at $15 an hour, and the price of a gallon of gasoline rose from $1.00 to $1.05. In this case, your real wage (in terms of gasoline) has
A. increased to $20. B. decreased to $14.25. C. decreased to $10. D. increased to $15.75.