Total Opportunity Cost =
What will be an ideal response?
Total Explicit Cost + Total Implicit Cost
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A utility maximizing person has a utility function such that their marginal rate of substitution equals the amount of good Y they consume divided by the amount of good X that they consume (i.e. MRS = Y/X). If the prices of goods X and Y are the same, then the person will
a. consume more X than Y. b. consume more Y than X. c. consume equal amounts of X and Y. d. we must know the person’s income before coming to a conclusion.
In the foreign exchange market, a change in which of the following will result in a movement along the demand curve for U.S. dollars?
A) the exchange rate B) the U.S. interest rate C) the interest rate in the foreign country D) the expected future exchange rate
According to the Solow model of economic growth, if per capita savings, s (Y/N)0, exceeds required steady state investment, (n + d) K/N, then
A) per capita output declines. B) capital per capita increases. C) capital per capita decreases. D) steady state growth characterizes the economy.
Causality (what causes what) is clear and mechanical with the quantity theory of money. If M increases, with
a. V and Q being variable, the price level, P, increases b. V and Q being variable, the price level, P, decreases c. V and Q being constant, the price level, P, increases d. V and Q being constant, the price level, P, decreases e. P and Q being constant, velocity, V, increases