Using the indifference curve model, a demand for X curve is derived by allowing:
A. the price of Y to change and holding the price of X and income constant.
B. income to change and holding the price of X and the price of Y constant.
C. the price of X and the price of Y to change and holding income constant.
D. the price of X to change and holding the price of Y and income constant.
Answer: D
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The multiplier effect indicates that:
A. a decline in the interest rate will cause a proportionately larger increase in investment. B. a change in spending will change aggregate income by a larger amount. C. a change in spending will increase aggregate income by the same amount. D. an increase in total income will generate a larger change in aggregate expenditures.
Holding the mean value of a gamble constant, the larger the standard deviation, the:
A. less risky the gamble will be. B. higher the utility will be from the gamble. C. more risky the gamble will be. D. None of the answers are correct.