Suppose that a consumer is at an optimum consuming A and B. If the price of A falls, then to get to a new equilibrium the consumer must
A. purchase less A and more B.
B. purchase more B.
C. purchase more A.
D. purchase less B and less A.
Answer: C
You might also like to view...
You borrow money to buy a house in 2009 at a fixed interest rate of 5.5 percent. By 2012, the inflation rate has steadily fallen to 1.5 percent from the recent high of 3.0 percent in 2009
Considering only your mortgage, is inflation good news or bad news for you? A) bad news, because it makes the nominal value of your mortgage payments increase B) bad news, because it makes the real value of your mortgage payments increase C) good news, because it makes the real value of your mortgage payments decrease D) bad news, because inflation hurts everyone
If the government implements a price ceiling on insulin, this will have all of the following effects on the market for insulin except
A) an increase in deadweight loss. B) a decrease in producer surplus. C) a more efficient equilibrium. D) a decrease in economic surplus.
Public choice analysis indicates that it will be politically more attractive to
a. enact restrictive fiscal policy during an economic expansion than to enact expansionary fiscal policy during a recession. b. enact expansionary fiscal policy during an economic expansion than to enact restrictive fiscal policy during a recession. c. enact expansionary fiscal policy during a recession than to enact restrictive fiscal policy during an economic expansion. d. raise taxes than to increase spending.
New Keynesian theory implies that which of the following reduces firms' incentive to adjust their prices?
A. a downward sloping aggregate demand curve B. menu costs C. the required reserve ratio D. none of these