When a consumer shifts her purchases from product X to product Y, the marginal utility of
A) X falls and the marginal utility of Y will increase.
B) both X and Y will decrease.
C) X increases and the marginal utility of Y will fall.
D) both X and Y will increase.
Answer: C
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Suppose real GDP is $13 trillion and potential real GDP is $13.5 trillion. If Congress and the president increase government purchases by $500 billion, then the economy will be brought to equilibrium at potential real GDP
Indicate whether the statement is true or false
When banks fail during a financial crisis, ________
A) the removal of these weak institutions serves to strengthen the financial system B) the elimination of competitors is likely to spark a credit boom C) there is a loss of information that can cause the crisis to worsen D) surviving banks resort to financial engineering to retain customers