If future consumption is a normal good, the interest rate/borrowing relationship cannot be upward sloping.
Answer the following statement true (T) or false (F)
True
Rationale: An increase in the interest rate causes a substitution effect in the direction of less borrowing. If future consumption is a normal good, it will cause an additional wealth effect in the direction of less borrowing.
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"Allocative efficiency requires that the maximum number of people have access to all of the goods and services that our economy produces." Is this statement true or false? Explain your answer
What will be an ideal response?
Which of the following will result in the most deadweight loss?
A) a natural monopoly regulated with marginal cost pricing B) an unregulated natural monopoly C) a natural monopoly regulated with average cost pricing D) All of the above result in the same deadweight loss.
Prior to 1950, for most of the years in which there were deficits, we were also
A. under Republican Presidents. B. under Democratic Presidents. C. in financial panics or depressions. D. at war.
Exhibit 12-1 Income distribution for three countries QuintileCountry I (%) Country II (%) Country III (%) Poorest 6 8 4 Second12 12 8 Third15 15 10 Fourth27 30 30 Richest40 35 48 Exhibit 12-1 shows the percentage of income received by each population quintile. In Country II we can conclude that the:
A. least-wealthy 40 percent of the population received 20 percent of the economy's income. B. least-wealthy 20 percent of the population received 25 percent of the economy's income. C. richest 20 percent of the population received 20 percent of the economy's income. D. richest 40 percent of the population received 35 percent of the economy's income.