Use the indifference curves and the budget lines in Figure 19.3 to answer the indicated question. Assume the price of Y is $1 per unit. In Figure 19.3, point E
A. Is a high level of utility but not affordable.
B. Is optimal and affordable.
C. Gives the consumer a very high level of utility and is affordable.
D. Represents a very low level of utility and is not desirable.
Answer: A
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An increase in the supply of money will lead to a(n)
A) increase in equilibrium real GDP and an increase in the equilibrium interest rate. B) increase in equilibrium real GDP and a decrease in the equilibrium interest rate. C) decrease in equilibrium real GDP and an increase in the equilibrium interest rate. D) decrease in equilibrium real GDP and a decrease in the equilibrium interest rate.
The number of brands of identical products will most likely increase as
A) the number of informed consumers increases. B) the cost of producing many brands decreases. C) the number of uninformed consumers decreases. D) None of the above.