If income where to double and prices were to to double the budget line would ?

A. Stay the same
B. Rotate inward
C. Shift outward in a parallel fashion
D. Rotates outward

If consumption when young and when old are both normal goods, an increase in the interest rate ?

A. Will always increase the quantity of saving
B. Will always decrease the quantity of saving
C. Will increase the quantity of saving if the substitution effect outweighs the income effect
D. Will increase the quantity of saving if the income effect outweighs the substitution effect

A reasonable measure of the standard of living in a country is ?

A. Real gdp per person
B. Nominal gdp per person.
C. Real gdp
D. The growth rate of nominal gdp per person

When a national has very little GDP per person ?

A. It is doomed to being relatively poor forever
B. None of these answers
C. An increase in capital will likely have little impact on output
D. It has the potential to grow relatively quickly due to the “catch-up-effect”

The change in consumption that results when a price change moves the consumer along a given indifference curve is known as the ?

A. Inferior effect
B. Normal effect
C. Substitution effect
D. Complementary effect

If leisure is a normal good, an increase in the wage ?

A. Will always increase the quantity of labor supplied
B. Will increase the amount of labor supplied if the substitution effect outweighs the income effect
C. Will increase the amount of labor supplied if the income effect outweighs the substitution effect
D. Will always decrease the amount of labor supplied

A change in the relative prices of which of the following pair of goods would likely cause the smallest substitution effect ?

A. Right shoes and left shoes
B. Petrol from bp and petrol from shell
C. Kit-kat chocolate snacks and twix chocolate snacks
D. Coke and pepsi

Which of the following is not true regarding the outcome of a consumer’s optimization process ?

A. the marginal utility per dollar spent on each good is the same
B. the marginal rate of substitution between goods is equal to the ratio of the prices between goods
C. the consumer’s indifference curve is tangent to his budget constraint
D. the consumer has reached his highest indifference curve subject to his budget constraint

The slope at any point on an indifference curve is known as ?

A. The marginal rate of substitution
B. The marginal rate of trade-off.
C. The trade-off rates
D. The marginal rate of indifference

Refer to Exhibit 4, Suppose that the consumer must choose between buying socks and belts Also suppose that the consumer’s income is €100 Suppose that the price of a pair of socks falls from €5 to €2 The income effect is represented by the movement from point ?

A. X to point y
B. X to point z
C. Y to point x
D. Z to point x