There are two conditions necessary for a consumer to maximize her utility. One is that the marginal utilities per dollar spent on each good and service consumed are equal. What is the other condition?
A) The prices of each good and service consumed must not be too high.
B) Total spending on all goods and services must equal the amount available to be spent.
C) The consumer must be satisfied with the choices she makes.
D) The total spent on each good and service is the same.
B
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Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the quantity of real loanable funds per time period and real GDP in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls and real GDP falls. b. The quantity of real loanable funds per time period falls and real GDP rises. c. The quantity of real loanable funds per time period rises and real GDP remains the same. d. The quantity of real loanable funds per time period and real GDP remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
According to the real business cycle model
A) increases in aggregate demand raise GDP. B) increases in aggregate demand lower GDP. C) increases in aggregate demand do not affect GDP. D) increases in aggregate demand lower the price level.