The substitution effect indicates that higher real interest rates ________ current consumption for households who are lenders and ________ current consumption for households who are borrowers
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
D
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If Congress and the president pursue an expansionary fiscal policy at the same time as the Federal Reserve pursues an expansionary monetary policy, how might the expansionary monetary policy affect the extent of crowding out in the short run?
What will be an ideal response?
Which of the following factors cause the IS curve to shift?
a. A change the money supply. b. A change in the level of taxes c. An autonomous investment change that shifts the investment function d. Both b and c e. All of the above
In the long run, an increase in the money supply growth rate
a. raises expected inflation so the short-run Phillips curve shifts right. b. raises expected inflation so the short-run Phillips curve shifts left. c. reduces expected inflation so the short-run Phillips curve shifts left. d. None of the above is correct.
Economic systems differ according to which two main characteristics?
A. Who owns the factors of production and the methods used to coordinate economic activity.
B. The technology used in production and the quantity and quality of natural resources.
C. How goods are produced and who gets them.
D. The political system in place and the degree of scarcity facing the economy.