Exhibit 1A-8 Straight line relationship
Which of the following would cause a shift in the relationship shown in Exhibit 1A-8?
A. A fall in household incomes.
B. A fall in the price of pizza.
C. A fall in the quantity of pizza that people wish to purchase.
D. A rise in the price of pizza.
Answer: A
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Van, whose utility of wealth curve is shown in the above figure, owns a home that is valued at $100,000. There is a 10 percent chance that the house will be destroyed by hurricane. The minimum cost of insurance in this case is
A) $10,000. B) $20,000. C) $30,000. D) $40,000.
Which of the following is most likely to cause the productivity of labor to increase?
a. higher money wages b. a higher rate of investment in human and nonhuman capital c. more flexible working hours and improved retirement plans d. an increase in the proportion of the workforce that belongs to a labor union
The defining features of business cycles is that they
A. are inherently bad B. represent the underlying trend of real GDP C. are fluctuations about trend of real GDP D. measure prospects for future growth in the economy
If the Fed increases the discount rate, it is pursuing
A) a contractionary policy because it will be more costly for banks to borrow funds and this puts upward pressure on interest rates in the economy. B) a contractionary policy because it reduces banks' profit margins by raising the cost of borrowing and lowering the return on lending. C) an expansionary policy because it raises the cost of holding excess reserves in the banking system. D) an expansionary policy because it increases bank profits by putting upward pressure on the interest rates that banks can charge on its loans