Which situation is consistent with the law of diminishing marginal benefit?
A. Joe's marginal benefit from eating pizza reaches a maximum when total benefit is zero.
B. The more pizza Joe eats, the less he enjoys an additional slice.
C. The more pizza Joe eats, the more he enjoys an additional slice.
D. Joe's marginal benefit from eating pizza becomes positive after eating three slices.
Answer: B
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The increase in spending that occurs because domestic goods become cheaper relative to foreign goods when the price level falls is known as the
A) interest rate effect. B) price effect. C) international trade effect. D) wealth effect.
Exports decrease by $500 billion, investment increases by $300 billion, and government expenditure increases by $200 billion. As a result, autonomous expenditures ________ , total expenditures ________ , and equilibrium real GDP ________
A) increases by $3500 billion; increases; increases by more than $300 billion B) decreases by $200 billion; decreases; decreases by more than $200 billion C) increases by $500 billion; increases; increases by more than $500 billion D) decreases by $300 billion; decreases; decreases by more than $300 billion E) is unchanged; is unchanged; is unchanged
Define the normal rate of return. If a business has fairly steady revenues and the future looks secure, what should the normal rate of return equal? Why?
What will be an ideal response?
Under a flexible exchange rate system, a nation that offers more attractive investment opportunities than its trading partners can expect to run a
a. surplus on current account transactions. b. deficit on current account transactions. c. balance of trade surplus. d. capital account deficit.