If an individual is a debtor
A. the substitution effect of an interest rate increase is zero.
B. the income and substitution effects of an increase in the interest rate work in opposite directions.
C. the income effect of an interest rate increase is zero.
D. the income and substitution effects of an increase in the interest rate work in the same direction.
Answer: D
You might also like to view...
Define the term "property rights." Explain why the lack of well-defined and enforceable property rights is detrimental to the smooth functioning of a market system
What will be an ideal response?
A Luddite is:
A. a worker whose real wage rises as a result of globalization. B. a consumer who refuses to buy imported goods, even if they are cheaper. C. a fictional character from American folk history. D. someone who opposes the introduction of new technologies.
The relationship that tells us how much a person intends to spend at various levels of income is
A) the expenditure function. B) the consumption function. C) the buying function. D) the spending function.
Suppose two neighborhoods (A and B) have identical housing, but neighborhood A has a strictly enforced deed restriction that prohibits homeowners from parking junk cars in the front yard
If houses in neighborhood A sell for $105,000 and houses in neighborhood B sell for $100,000, how would an economist value the external cost of visible junk cars, per house? A) $205,000 B) $105,000 C) $100,000 D) $5,000 E) None of the above answers is correct.