Answer the following statements true (T) or false (F)
1. If the price of a good increases, it will tend to make the MU-to-P ratio for the good rise and the good becomes more attractive to the buyer.
2. The law of diminishing marginal utility implies that in order to induce a buyer to buy more of a product, the seller must lower its price.
3. The income effect of a price-increase for a normal good causes an increase in the consumption of the good.
4. The substitution effect of a price-decrease for a good causes an increase in the consumption of the good, regardless of whether the good is normal or inferior. 5. An increase in the real income of a consumer is one result from an increase in the price of a product that the consumer is buying.
1. FALSE
2. TRUE
3. FALSE
4. TRUE
5.FALSE
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An important effect of fractional reserve banking is that bankers have
a. little control over total reserves. b. total control over the amount of lending in the economy. c. no control over the amount of reserves in the banking system. d. some discretion over the money supply.
An increase in the money supply shifts the aggregate-supply curve to the right
a. True b. False Indicate whether the statement is true or false