A higher rate of return on saving has
a. an income effect that discourages saving and a substitution effect that encourages saving.
b. an income effect that encourages saving and a substitution effect that discourages saving.
c. income and substitution effects that both decrease saving.
d. income and substitution effects that both increase saving.
a
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Excess capacity exists when a firm produces
A) more than the profit-maximizing level of output. B) less than the quantity that minimizes average total cost. C) less than the quantity that minimizes marginal cost. D) more than the quantity that minimizes marginal cost. E) None of the above answers is correct.
Assuming that Pepsi-Cola and Coca-Cola are substitutes, a rise in the price of Pepsi-Cola, other things being equal, results in a(n):
a. upward movement along the demand curve for Coca-Cola. b. downward movement along the demand curve for Coca-Cola. c. leftward shift in the demand curve for Coca-Cola. d. rightward shift in the demand curve for Coca-Cola.
In the short run, a restrictive fiscal policy will cause aggregate demand, output, and the price level to change in which of the following ways?
A) Decrease/Decrease/Decrease B) Decrease/Increase/Increase C) Increase/Decrease/Decrease D) Increase/Decrease/Increase E) No change/No change/No change
Firms are the producing units of the economy.
Answer the following statement true (T) or false (F)