Given the utility-optimizing rule and the presence of diminishing marginal utility for a good
A) the demand curve for the good will be vertical.
B) there will not be a well-defined demand curve.
C) there will not be a substitution effect.
D) the demand curve for the good will be negatively sloped.
Answer: D
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Using the aggregate supply drawn under the monetarist view, what should happen to the equilibrium price level and quantity of output if the Fed buys bonds?
A. Equilibrium price level and equilibrium output should both increase. B. Equilibrium price level should increase, and equilibrium output should decrease. C. Equilibrium price level should decrease, and equilibrium output should increase. D. Equilibrium price level should increase and equilibrium output should stay constant.
In 2007, interest rates in Germany were 4.7 percent while the inflation rate was 1.7 percent. In 2008, interest rates increased to 5.3 percent and the inflation rate increased to 2.0. As a result, there is
A) a leftward shift in Germany's demand for money curve. B) a downward movement along Germany's demand for money curve. C) a rightward shift in Germany's money supply curve. D) an upward movement along Germany's demand for money curve.