The decision rule for constrained optimization is to select the level for each activity at which
A. total benefit per dollar of total cost is equal across all activities.
B. marginal benefit equals marginal cost for each activity.
C. total benefit equals total cost for each activity.
D. marginal benefit per dollar of marginal cost is equal across all activities.
Answer: D
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Cross elasticity of demand could be used to measure the responsiveness of the quantity demanded of swimming pools to a change in the price of picnic tables.
Answer the following statement true (T) or false (F)
The reserve ratio is 20 percent. The Fed buys $1 million in government securities from a bond dealer by transmitting the funds to the dealer's deposit account at Bank A. Bank A makes the maximum loan possible to a construction company, which buys materials with the loan. The check is deposited in Bank B, which loans out all it can to a car dealership. To this point, the money supply has increased by
A. $3 million. B. $1 million. C. $1.8 million. D. $2.44 million.