The Assumption That the Marginal Utility of Wealth Diminishes Implies

question 21

Multiple Choice

The assumption that the marginal utility of wealth diminishes implies that

• A) total utility falls when wealth increases.
• B) the marginal utility of wealth is negative.
• C) total utility increases with wealth and each additional unit of wealth increases total utility by a smaller amount.
• D) total utility increases with wealth and each additional unit of wealth increases total utility by the same amount.

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Definitions:

FX Swaps

A financial agreement where two parties exchange currencies at a specified rate for a certain period, often used to hedge currency risks.

Spot Transaction

A financial contract for the immediate purchase or sale of a commodity, currency, or other asset, with delivery taking place immediately or within a short period.

Forward Transaction

A financial agreement to buy or sell an asset at a specified future date and price.

Gross Domestic Product

The total monetary value of all goods and services produced within a country's borders in a specific time period, commonly used as a measure of economic performance.