In the two-period model with limited commitment, if the collateral constraint binds
A) increases in the present value of collateral increase current consumption and reduce future consumption.
B) increases in the present value of collateral increase current consumption one-for-one.
C) increases in the present value of collateral decrease current consumption and increase future consumption.
D) increases in the present value of collateral increase current consumption less than one-for-one.
B
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The finite nature of the economy's resource base:
a. will be solved if only we would learn to conserve. b. is only a problem in developing countries. c. will be solved as technology advances. d. will always be with us.
Countries tend to export different goods and services because of:
a. differences in their comparative advantages. b. differences in tastes and technological needs. c. differences in income. d. similarities in resource endowment. e. differences in the exchange rates.
The opportunity cost of attending college for one year is best measured by the:
A. benefit received by the student. B. tuition paid for the year. C. total money expenses associated with attending college. D. value of the next-best activity forgone by attending college.
James is a resident of the U.S. and has accrued capital gains on an asset. If James dies prior to the realization of capital gains, ________.
A. his heirs will have to pay the tax on gains B. his heirs can sell the asset and the gains will be tax-free C. his heirs will have to pay a death tax along with the capital-gains tax D. his heirs will not be able to sell the asset