The shift of the budget line from cd to ab in the above figure is consistent with:
A) decreases in the prices of both M and N .
B) an increase in the price of M and a decrease in the price of N .
C) a decrease in money income.
D) an increase in money income.
Answer: C) a decrease in money income.
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Suppose we know that 10 Spanish Galleons sunk in the Atlantic ocean carrying approximately 50 tons of gold, but the exact location of these shipwrecks is unknown. Would this gold add to the world reserve?
A) Yes, we know it exists. B) No, we know it exists but we can't extract the gold. C) Yes, it's only a matter of time before the shipwrecks are discovered. D) No, there are no established property rights over the shipwreck so they cannot add to world reserves..
When the price of a product rises faster than the inflation rate,
A. Nominal incomes of the consumers of that product rise. B. Real incomes of the consumers of that product fall. C. Nominal incomes of the consumers of that product fall. D. Users of that product have higher real incomes than people who do not consume the product.