If the Slope of the Indifference Curve Is Steeper Than

question 10

Multiple Choice

If the slope of the indifference curve is steeper than the slope of the budget line,and X is on the horizontal axis:

• A) the consumer is willing to give up more of good Y to get an additional unit of good X than is necessary under the current market prices.
• B) MRS < P_X /P_Y.
• C) MRS < −P_X /P_Y.
• D) the consumer is willing to give up more of good X to get an additional unit of good Y than is necessary under the current market prices.

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Definitions:

Simple Money Multiplier

A formula that determines the maximum amount of money that banks can create with a given level of reserves.

Excess Reserves

Banks' reserves that exceed the minimum required by the central bank, available for lending or investment.

Interest Rate

The price, expressed as a percentage of the principal, that a borrower must pay a lender for the use of funds.

Excess Reserves

are bank reserves held in excess of what is required by the central bank, which can be lent out to earn interest.