The substitution effect of a decrease in real interest rates is to cause a consumer to
A. increase future consumption and decrease current consumption.
B. decrease future consumption and increase current consumption.
C. decrease current consumption and increase saving.
D. increase current consumption and increase saving.
Answer: B
You might also like to view...
The process of countries becoming more open to foreign trade and investment is known as
A) autarky. B) globalization. C) protectionism. D) foreign exchange.
As a result of the increased deficit associated with discretionary fiscal policy, _____
a. both the interest rate and real output fall b. both the interest rate and nominal output rise c. the interest rate falls and real output rises d. the interest rate rises and real output falls e. nominal output rises, real output falls, and the interest rate rises
Which of the following helps in determining whether health care cost rises because of government policy, or because of demand rising faster than supply?
a. Examining the market for health care away from the belief that the market outcome is unfair b. Examining the market for health care with the belief that the market outcome is unfair c. Examining the allocation system d. Examining the changes in the price of health care products e. Examining the changes in the number of suppliers of health care in the market
If the numbers of people officially employed and officially unemployed each increased by 5%, with no change in the non-institutional civilian population, what would be the effect?
a. an increase in the unemployment rate and no change in the labor force participation rate b. a decrease in the unemployment rate and no an increase in the labor force participation rate. c. no change in the unemployment rate and an increase in the labor force participation rate d. no change in the unemployment rate and a decrease in the labor force participation rate