How does an increase in the short-term interest rate affect peoples' desire to hold real money balances?
A) People will hold more money to compensate for the higher interest rate.
B) People will hold more money in anticipation of higher inflation.
C) People will hold less money since they would be sacrificing more interest by holding money.
D) People will hold less money since it is not worth as much.
C
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In the loanable funds market, the supply comes from
A) saving, the government budget surplus and international borrowing. B) only saving and the government budget surplus. C) only saving. D) only the government budget surplus and international borrowing.
Hector's wealth is zero, he expects to work for another 45 years at a constant salary of $80,000 and live for another 60 years. If yearly taxes are $20,000 and Hector completely smooths consumption over his lifetime, his annual consumption is
A) $37,500. B) $45,000. C) $60,000. D) $70,000.
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The time spent by students in college
a. leads to lower lifetime earnings because opportunity costs are high. b. is an investment in human capital. c. decreases human capital by lowering work experience. d. increases as the wages paid to low-skilled workers rise.