(A) The more a person consumes of a product, the smaller becomes the utility which
he receives from its consumption.
(B) The more a person consumes of a product, the smaller becomes the
additional utility which she receives as a result of consuming an additional
unit of the product.
(C) The less a person consumes of a product, the smaller becomes the utility which
she receives from its consumption.
(D) The less a person consumes of a product, the smaller becomes the additional
utility which he receives as a result of consuming an additional unit of the
product.
Category: Economics Mcqs
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Marginal utility measures:
(A) The slope of the indifference curve.
(B) The additional satisfaction from consuming one more unit of a good.
(C) The slope of the budget line.
(D) The marginal rate of substitution.
The intersection of the IS and LM curves captures:
(A) the equilibrium of the demand and supply sides of the economy
(B) the equivalence of monetary and fiscal policy
(C) joint equilibrium in the goods and money markets
(D) all of the above
If the income elasticity of money demand and the Keynesian multiplier, both increase in an economy (ceteris paribus), how will the relative effectiveness of monetary and fiscal policy change?
(A) Fiscal policy will become relatively more effective than monetary policy
(B) Fiscal policy will become relatively less effective than monetary policy
(C) The relative effectiveness of fiscal and monetary policy will remain unchanged
(D) Both fiscal and monetary policy will become more effective.
If the government increases its spending, but this causes prices to rise, what will “eventually” happen to the equilibrium income and interest rate?
(A) Both income and the interest rate will remain unchanged
(B) income will come down, but the interest
(C) income will go up, but the effect on the interest rate cannot be predicted
(D) interest rates will go down, but the effect on income cannot be predicted
Given a Keynesian world, a cut in taxes coupled with a lower reserve ratio for banks would have what effect on equilibrium income and interest rate?
(A) Both income and the interest rate will remain unchanged
(B) income will come down, but the interest rate will go up
(C) income will go up, but the effect on the interest rate cannot be predicted
(D) interest rates will go down, but the effect on income cannot be predicted
Which of the following is neither a determinant of the slope of the IS curve nor a determinant of the slope of the LM curve?
(A) the sensitivity of interest rates to investment
(B) the sensitivity of money demand to income
(C) the sensitivity of money demand to interest rates
(D) the sensitivity of income to investment
Which of the following events will lead to a decrease in the demand for money?
(A) An increase in the level of aggregate output.
(B) A decrease in the supply of money.
(C) A decrease in the interest rate.
(D) A decrease in the price level.