Cindy Has $70 a Month to Spend,and She Can Spend

question 109

Multiple Choice

Cindy has $70 a month to spend,and she can spend as much time as she likes playing golf and tennis.The price of an hour of golf is $10,and the price of an hour of tennis is $5.If Cindy equalizes the marginal utility per hour from golf and from tennis,she

• A)can increase her total utility by spending less time golfing and more time playing tennis.
• B)can increase her total utility by spending more time golfing and less time playing tennis.
• C)maximizes her total utility.
• D)can increase her total utility only if the price of golf decreases.
• E)cannot increase her total utility.

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Definitions:

Monetary Policy Lags

The delay between the implementation of monetary policy decisions and their effects on the economy, often complicating central bank efforts to control inflation and stimulate economic growth.

Fiscal Policy

Government policies related to taxation and spending that are intended to influence economic conditions.

Policy Makers

Individuals or groups responsible for making decisions and setting policies in governmental or corporate sectors.

Phillips Curve

A curve showing possible combinations of the inflation rate and the unemployment rate.