Ben is exhausting his money income consuming products A and B in such quantities that MUa/Pa = 5 and MUb/Pb = 8. Ben should purchase:
A) more of A and less of B.
B) more of B and less of A
C) more of both A and B.
D) less of both A and B.
Ans: B) more of B and less of A
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Refer to Figure 4-6. What area represents consumer surplus at the equilibrium price of P1?
A) D + E B) A C) A + B + C + D + E D) A + B + C
Assume that the central bank lowers the discount to increase the nation's monetary base. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and GDP Price Index in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete equilibrium. a. The real
risk-free interest rate falls and GDP Price Index falls. b. The real risk-free interest rate rises and GDP Price Index falls. c. The real risk-free interest rate and GDP Price Index remain the same. d. The real risk-free interest rate falls and GDP Price Index rises. e. There is not enough information to determine what happens to these two macroeconomic variables.