Which of the following statements is true?
A) A rational consumer makes his decisions depending on what the majority chooses.
B) A trade-off refers to the exchange of goods between economic agents through a barter system or mutual exchange.
C) A budget constraint is an economic tool that quantifies the trade-off between consumption of two goods.
D) All rational economic agents attempt to maximize their income.
C
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The velocity of money equals:
A. nominal GDP times the money supply. B. nominal GDP divided by the price level. C. nominal GDP times the price level. D. nominal GDP divided by the money supply.
Assume that the full-employment level of output is $2,000 and the price level associated with full-employment output is 100. Also assume that the economy's current level of output is $1,900 and at the price level of 100 current aggregate demand is $1,820. If the government moves the economy back to the full-employment level of output by reducing taxes by $60, then the MPC equals
A. 0.6. B. 0.75. C. 0.5. D. 0.8.