The self-control hypothesis suggests that people:
A. control their spending in order to save more when the real interest rate increases.
B. substantially decrease their saving when the real interest rate increases.
C. base their spending decisions (and consequently their saving decisions) on spending decisions of others.
D. want to save, but lack the discipline to refrain from consuming.
Answer: D
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“The market has failed to provide enough rental housing in New York City. This demonstrates another failure of free markets-they may lead to shortages of necessities.” Explain why you agree or disagree.
What will be an ideal response?
If there is a financial panic and increased uncertainty about the returns in the stock market and bond market, what is the likely effect on money demand?
A) Money demand declines first, then rises when inflation increases. B) Money demand rises. C) The overall effect is ambiguous. D) Money demand declines.
Price elasticity of demand refers to the ratio of the:
a. percentage change in price of a good in response to a percentage change in quantity demanded. b. percentage change in price of a good to a percentage increase in income. c. percentage change in the quantity demanded of a good to a percentage change in its price. d. none of these.
Academic institutions frequently talk about academic excellence and how they have superior programs in everything. "If it is not top quality it will not be offered here" seems to be the theme of many college catalogs. Explain, on the basis of material in this chapter, why this public relations noise is not believable.
What will be an ideal response?