Why does an indifference curve slope downward and why is it bowed toward the origin?
What will be an ideal response?
The downward slope of an indifference curve illustrates the tradeoff between two goods while maintaining the same level of total satisfaction. Since the consumer is indifferent among all points on an indifference curve, when moving along it any increase in satisfaction from gaining one good must be matched by an equal decrease in satisfaction from a loss in the other good. An indifference curve is bowed toward the origin because the more of good x that is consumed the less you are willing to give up of good y to get more of good x and remain indifferent.
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How do economists try to disentangle cause and effect?
What will be an ideal response?
Which policy tool allows the Federal Reserve the greatest control over monetary policy?
A) the reserve requirement B) open market operations C) lender of last resort D) the discount rate
Which of the following is a normative economic statement?
A) An increase in corporate income taxes will cause the unemployment rate to increase. B) The costs of medical care are increasing faster than the incomes of U.S. citizens. C) Teenage unemployment is over ten percent. D) Teenage unemployment is too high.
If the exchange rate of yen for dollars increases from 100 yen = $1 to 110 yen = $1, then:
a. Japanese-produced goods would become more expensive. b. the dollar has depreciated. c. the yen has appreciated. d. U.S.-produced goods would become more expensive. e. U.S. exports would increase.