Which of the following is true?
A. People tend to enjoy the process of buying a car more when the process involves difficult choices.
B. Budgeting your income will often result in less total spending.
C. High prices and rebates on cars simply irritate the consumer and make him feel treated like a fool.
D. People prefer the toll ways where they throw in some change every dozen miles or so to a toll road that has one payment at the end of the trip.
Answer: B
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The following graph applies to a consumer for whom good x is an inferior good. The price of x falls from p to p', and one of the curves below represents the consumer's (uncompensated) demand curve while the other represents the consumer's compensated demand (or MWTP) curve.
a. Which curve is which? (Explain.)
b. What is it about these curves that makes them intersect at the original price p?
c. Once the consumer has optimized at the new price p', illustrate the new (uncompensated) demand and the new MWTP curve. d. For curves that have shifted, explain why; for curves that have not shifted, explain why as well. What will be an ideal response?
The MP curve may be used to represent how ________
A) movements of the inflation rate are determined by the real interest rate B) monetary policy responds to changes in the real interest rate C) movements of the real interest rate are related to the inflation rate D) all of the above E) none of the above
If a country's currency is ________, then the country can borrow from other countries almost without limit by issuing assets that will be held by the central banks of other countries.
A. golden B. pegged C. floating D. a reserve currency
Where the IS and LM curves intersect:
a. actual expenditure is equal to planned expenditure. b. output equals aggregate demand. c. savings plus taxes equals investment plus government spending. d. all of the above.