Describe how marginal utility and demand are related
Please provide the best answer for the statement.
Marginal utility helps explain the down sloping nature of the demand curve. Since additional units of consumption yield less and less utility, consumers will only consume additional units of a good if the price lowers. The consumer would rather spend additional dollars on another good with equal or greater utility, not diminishing utility. Put on a larger scale, this develops the idea that price has to lower for more quantity to be consumed, thus supporting the inverse relationship between price and quantity demanded.
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"A lower price level may lower the interest rate, but investment demand may not respond to this." This is a statement a __________ economist might make as an explanation of why the economy __________ pull out of a recession
A) Classical; will B) Classical; may not be able to C) Keynesian; will D) Keynesian; may not be able to
In 1995 House Speaker Newt Gingrich threatened to send the United States into default on its debt. During the day of this announcement, U.S. interest rates rose and the real exchange rate of the U.S. dollar depreciated. Which of these changes is consistent with the results of the open-economy macroeconomic model?
a. the increase in U.S. interest rates b. the depreciation of the real exchange rate of the U.S. dollar c. Both a and b are consistent. d. Neither a nor b are consistent.