At a fixed income level, an increase in consumption which is accompanied by a decrease in savings is reflected by
A) an upward rotation of the consumption function.
B) an upward shift of the consumption function.
C) a movement up along the consumption function.
D) a downward rotation of the consumption function.
B
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Janie convinces her uncle Seymour that she is on the Dean's list each semester and asks him to lend her $5,000 to help pay for her college tuition for the upcoming year, assuring him that she will be able to pay him back as soon as she graduates and
gets a job. In reality, Janie has flunked out of college, has spent all her savings on food for her 40 ferrets, and wants to use the money to bail her boyfriend out of jail. Not being honest with her uncle when asking for the loan is an example of ________, and spending the borrowed money to pay her boyfriend's bail is an example of ________. A) moral hazard; asymmetric information B) moral hazard; the principal-agent problem C) adverse selection; moral hazard D) the principal-agent problem; adverse selection
The hypothesis that people believe the best indicator of the future is the recent past is known as:
a. rational expectations. b. adaptive expectations. c. lagged expectations. d. trend expectations.
The law of demand illustrates a(n) ____ relationship between price and ____
a. direct; quantity demanded b. inverse; quantity demanded c. inverse; demand d. direct; demand
Refer to the graphs shown.
If labor supply shifts from S1 to S2, the market wage rate will:
A. decrease from W1 to W0. B. increase from W0 to W1. C. increase from W1 to W2. D. decrease from W2 to W1.