A rise in the real interest rate ________ consumption expenditure and ________
A) decreases; shifts the consumption function downward
B) decreases; results in a movement downward along the consumption function
C) decreases; shifts the consumption function upward
D) increases; shifts the consumption function upward
E) increases; shifts the consumption function downward
A
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Suppose that medical researchers discover a new drug which slows the aging process allowing the average life span in the United States to increase to 95 years of age. The lifecycle hypothesis suggests that
A) consumption spending would increase since lifetime income increases. B) consumption spending would increase since estimates of permanent income would increase. C) consumption spending would decrease since savings would rise to provide income for the longer retirement periods. D) None of the above is correct since predicted future annual incomes may not change.
Which of the following essential factors enables commercial banks to create money?
a. Required reserves b. Excess reserves c. State and local government securities d. U.S. government securities e. Net worth
Refer to Figure 6.4. If the price of computers is $1,000, then expenditures on computers is represented by the area:
A. c + d
B. c
C. b + c
D. a + b + c
Barriers to entry:
A. restrict the number of firms in an industry. B. exist only in perfectly competitive markets. C. limit output in an industry. D. do not affect the number of firms in an industry.