In making decisions about what to consume, a person's goal is to
A) allocate her limited income among all the products she wishes to buy so that she receives the highest total utility.
B) buy low-priced goods rather than high-priced goods.
C) maximize her marginal utility from the goods and services she wishes to buy using her limited income.
D) consume as many necessities as possible and then, if there is money left over, to buy luxuries.
Answer: A
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Assume that a monopolist practices perfect price discrimination. The firm will produce an output rate
A) that is greater than the efficient level of output. B) that is less than the efficient level of output. C) that is equal to the efficient level of output. D) that converts consumers surplus into a deadweight loss.
Refer to the above figure. Suppose the economy is at E and the government uses an expansionary fiscal policy to move the aggregate demand curve to AD2. In the end, the aggregate demand curve is still AD1. A possible reason for this is that
A) the economy is already at full employment. B) the increased borrowing causes higher interest rates, which encourage people to save more and increase investment spending due to the extra saving. C) people increase saving because they anticipate higher future taxes, resulting in a reduction in current consumption spending that offsets the increased government spending. D) some of the increased government spending is not counted in GDP.
Members of the Federal Reserve Board of Governors are appointed for one fourteen-year term so that they:
A. Have time to learn how the Fed operates. B. Are more likely to make politically acceptable decisions. C. Make their decisions based on economic, rather than political, considerations. D. Have enough time to travel to all 12 regional banks.
The price of a Honda Accord
a. and the price of a Honda Accord divided by the price of a Honda Civic are both real variables. b. and the price of a Honda Accord divided by the price of Honda Civic are both nominal variables. c. is a real variable, and the price of a Honda Accord divided by a Honda Civic is a nominal variable. d. is a nominal variable and the price of a Honda Accord divided by the price of a Honda Civic is a real variable.