Refer to the figure above. If John spends his entire income on tables, how many tables can he purchase?
A) 8
B) 10
C) 30
D) 40
D
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Marginal utility theory predicts that when income increases a
A) person's total utility will not change. B) person might increase the consumption of some normal goods and decrease the consumption of other normal goods. C) person's consumption of normal goods will increase. D) None of the above answers is correct because marginal utility theory does not address how demand changes in response to changes in income.
In a two-economy model of the United States and another large economy made up of the rest of the world, if desired saving by the rest of the world declined
A) U.S. investment would increase. B) U.S. saving would decrease. C) the world real interest rate would increase. D) the world real interest rate would decrease.
If Americans became more pessimistic about the economy, what would happen to the consumption-income line?
a. A rightward movement along the line b. A leftward movement along the line c. The entire line would shift upward d. The entire line would shift downward e. The entire line would shift downward and there would be a rightward movement along the new line
An increase in oil prices is considered a supply shock because it would lead to a shift of the aggregate supply curve
a. True b. False