If the individuals in a group of consumers all have homothetic tastes, then we can treat the group as a single representative consumer.
Answer the following statement true (T) or false (F)
False
Rationale: If individuals have homothetic tastes, it means that each individual will remain on the same ray from the origin as income changes. But different individuals might optimize on different rays from the origin (and still all have homothetic tastes) -- in which case the change in their consumption as income is redistributed is not offsetting.
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If the marginal propensity to consume is 0.6, the marginal propensity to save is
A) 0.4. B) 0.6. C) 1. D) 1.5.
One advantage of a floating exchange rate system compared to a fixed or managed float exchange rate system is
A) it is easier for central banks to control inflation. B) there is no need for government intervention. C) it allows greater exchange rate stability. D) it eliminates the possibility of depreciation during a recession.
White-collar jobs guarantee financial security
Indicate whether the statement is true or false