Suppose a Consumer Has Preferences Over Two Goods, X and Y

question 262

Multiple Choice

Suppose a consumer has preferences over two goods, X and Y, which are perfect substitutes. In particular, two units of X is equivalent to one unit of Y. If the price of X is $1, the price of Y is $3, and the consumer has $30 of income to allocate to these two goods, how much of each good should the consumer purchase to maximize satisfaction?

• A)30 units of X and 0 units of Y
• B)0 units of X and 10 units of Y
• C)15 units of X and 5 units of Y
• D)15 units of X and 0 units of Y

Understand the concepts of stagflation, national debt, fiscal deficit, and how they affect the economy.

Interpret the effects of supply-side economics, including the impacts of tax cuts on aggregate supply.

Comprehend the historical context and effectiveness of Keynesian economics across different decades and economic conditions.

Analyze the relationship between government policies and economic indicators such as employment, inflation, and real GDP.

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Definitions:

Annual Return

The percentage change in an investment's value over a one-year period, including dividends and interest.

Future Value

The value of an investment at a specified date in the future, taking into account factors like compound interest or returns.

Ordinary Annuity

A sequence of identical disbursements occurring at successive intervals for a set duration.

Accumulated Value

The total sum of all investments, earnings, and reinvestments over a period, often referring to the value of a life insurance policy.