The average demand curve slopes downward due to all of the following EXCEPT
A) the law of increasing relative costs.
B) the laws of diminishing marginal utility.
C) the real-income effect.
D) the principle of substitution.
Answer: A
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If, in 2000, $1 = 1.5 euros, and in 2007, $1 = 0.9 euros, which of the following statements would be TRUE?
a. More American tourists will find it cheaper to travel to Europe. b. More Europeans will stay home as visits to the United States become more expensive. c. Europeans will import fewer products from the United States. d. Americans will import fewer products from Europe.
If there is a recession, the Fed would most likely
a. encourage banks to provide loans by lowering the discount rate b. encourage banks to provide loans by raising the discount rate c. restrict bank lending by lowering the discount rate d. restrict bank lending by raising the discount rate e. restrict bank lending by lowering the federal funds rate