The Absolute Value of the Slope of the Budget Constraint

question 95

Multiple Choice

The absolute value of the slope of the budget constraint is equal to

• A)the marginal rate of substitution between the two goods in question.
• B)the price of the good on the vertical axis divided by the price of the good on the horizontal axis.
• C)the price of the good on the horizontal axis divided by the price of the good on the vertical axis.
• D)quantity of the good on the vertical axis divided by the quantity of the good on the horizontal axis.

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Definitions:

Patent Protection

Legal rights granted to inventors to exclusively make, use, or sell their inventions for a certain period.

Aggregate Demand

The total demand for all goods and services in an economy at various price levels, during a specific time period.

Full Employment

An economic situation where all available labor resources are being used in the most efficient way possible, essentially meaning there is no involuntary unemployment.

Keynes

Refers to John Maynard Keynes, an influential British economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments.