Greg spends his entire budget on two goods: he plays video games at the mall arcade and he buys pizza. He discovers that his MU/P of video games is lower than his MU/P of pizza. From this, we know that he would be:
A. as happy as possible, since he is already maximizing total utility.
B. happier eating less pizza and playing more video games.
C. happier eating more pizza and playing fewer video games.
D. indifferent to which selection he makes.
Answer: C
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If disposable income falls, consumption expenditure falls ________
A) by an amount that depends on the real interest rate B) so that planned expenditure remains constant C) by an amount smaller than the decrease in disposable income D) all of the above E) none of the above
When Mexico's exchange rate depreciated dramatically in 1994,
a. American exports to Mexico increased b. American exports to Mexico declined c. Mexican tourism to the U.S. increased d. American tourism to Mexico decreased e. Mexicans received more dollars for their peso