Suppose that you have $100 today and expect to receive $100 one year from today. Your money market account pays an annual interest rate of 25%, and you may borrow money at that interest rate. Consider the budget constraint between "spending today" on the horizontal axis and "spending a year from today" on the vertical axis. What is the slope of this budget constraint?
a. -0.75
b. -1.00
c. -1.25
d. -2.25
c
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Suppose that a decrease in the demand for goods and services pushes the economy into recession. What happens to the price level? If the government does nothing, what ensures that the economy still eventually gets back to the natural rate of output?
Who bears the burden of an excise tax if demand is perfectly inelastic? What if supply is perfectly inelastic? Use graphs in your explanation.
What will be an ideal response?
Classical growth theory argued that economic growth was limited because of diminishing marginal productivity.
Answer the following statement true (T) or false (F)
In 2015, the country with the highest GDP per capita in the world was
A. the United States. B. India. C. China. D. Norway.