Why is water much cheaper than diamonds even though water is essential to human lives while diamonds are NOT?
What will be an ideal response?
This is called the diamond-water paradox. The total utility of water greatly exceeds the total utility of diamonds, but the marginal utility of diamonds far exceeds the marginal utility of water because of the much more limited supply of diamonds than water. The relative prices are determined by marginal utilities, not total utilities.
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Suppose the Federal Reserve wanted to reduce the money supply without using open-market operations
It could try to get the public to ________ their currency—deposit ratio and ________ banks' reserve requirements, which would in turn change the banks' reserve—deposit ratio. A) decrease; lower B) decrease; raise C) increase; lower D) increase; raise
Under the Sarbanes-Oxley Act of 2002, the provision that gives more funding to the SEC is an example of
A) regulate for transparency. B) supervisory oversight. C) separation of functions. D) socialization of information production.
Expansionary fiscal policy would involve ________, whereas contractionary fiscal policy would involve ________
A) increasing the money supply; increasing personal income taxes B) increasing corporate income taxes; raising interest rates C) increasing transfer payments; increasing corporate income taxes D) increasing government purchases; increasing transfer payments
According to the text, in the century prior to the Revolution, ____________ were a "strategic factor in the overall economic advance of the colonies."
a. advances in technology b. advances in manufacturing c. advances in farm equipment d. advances in shipping