Current income is 300, expected future income is 363, and the interest rate is 10%. If current income rises to 363 and consumption is smoothed across periods, then consumption in each period becomes
a) 326.7
b) 363
c) 399.3
d) 350
e) 371
b) 363
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A barber currently cuts hair for 50 clients per week and earns a profit. He is considering expanding his operation in order to serve more clients. Should he expand?
a. Yes, because cutting hair is profitable. b. No, because he may not be able to sell more services. c. It depends on the marginal cost of serving more clients and the marginal revenue he will earn from serving more clients. d. It depends on the average cost of serving more clients and the average revenue he will earn from serving more clients.
An increased equilibrium price and a decreased equilibrium quantity results from:
a. a decrease in supply. b. an increase in demand. c. an increase in supply. d. a decrease in demand.
Describe how Say's law can hold in a money economy, according to the classical economists
The most effective monetary policy tool of the Federal Reserve is
A. the reserve requirements. B. discount operations. C. margin requirements. D. open market operations.