Assume that an individual consumes only hotdogs and colas and that the last hotdog consumed yields 15 utils and the last cola 10 utils. If the price of a hotdog is $1 and the price of a cola is $.50, we can conclude that the:
a. consumer should consume more hotdogs and less cola.
b. price of hotdogs is too high.
c. consumer should consume fewer hotdogs and more cola.
d. consumer is in equilibrium.
c
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Compared with a system of fixed exchange rates, currency unions have the disadvantage of
A. requiring every country to share a common fiscal policy. B. decreasing the sacrifice ratio. C. allowing exchange rates to float. D. requiring all its members to share a common monetary policy.
The imaginary figure who advises us whether society is making the most of its scarce resources is the
A) opportunity-cost pixie. B) benevolent social planner. C) scarcity goddess. D) compassionate dictator.
If real wages fall as output rises, then in the classical model it must be the case that
a. labor demand rose. b. labor demand fell. c. labor supply rose. d. labor supply fell. e. none of the above.
The buying and selling of government bonds to influence reserves in the banking system is the responsibility of the:
A. Twelve regional Federal Reserve banks. B. Executive Branch of the government. C. Board of Governors of the Federal Reserve. D. Federal Open Market Committee.