Consider a consumer who spends all income on only two goods: bread and wine. An extra loaf of bread would give the consumer 10 extra util, while an extra bottle of wine would give the consumer 60 extra utils. Bread costs 50ยข per loaf, and wine costs $6 per bottle. In this situation, the consumer:

a. could increase utility by buying more bread and less wine.
b. could increase utility by purchasing more wine and less bread.
c. has maximized utility and attained consumer equilibrium.
d. is violating the law of diminishing marginal utility.

a

Economics

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In 2009, Congress passed a bill that involved government spending increases and tax cuts with the purpose of stimulating the U.S. economy. This policy is an example of

A) an automatic stabilizer. B) contractionary fiscal policy. C) expansionary fiscal policy. D) expansionary monetary policy.

Economics

Suppose two countries are identical in every way with the following exception. Economy A has a higher rate of depreciation (?) than economy B. Given this information, we know with certainty that

A) steady state consumption in A is higher than in B. B) steady state consumption in A is lower than in B. C) steady state consumption in A and in B are equal. D) steady state growth of output per worker is higher in A than in B. E) none of the above

Economics