The change in the savings rate during the 1990s is NOT consistent with
A) Friedman's permanent-income hypothesis.
B) Modigliani's life cycle hypothesis.
C) the boom in the stock market.
D) All of the above.
A
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Higher interest rates increase both consumption and investment spending
Indicate whether the statement is true or false
With respect to consuming food and shelter, two consumers choose the same bundles and both claim to be in equilibrium. We therefore know that
A) they both have the same MRS of food for shelter. B) they both face the same prices. C) they both face the same budget lines. D) None of above.
A wealthy English executive decides to buy a large amount of U.S. financial assets. This would contribute to
a. a deficit in the U.S. capital account. b. a surplus in the U.S. current account. c. a surplus in the U.S. capital account. d. a deficit in the total balance of payments.
Two key assumptions of new Keynesian theory include:
A) (1 ) people hold rational expectations, and (2 ) wages and prices are not completely flexible in the short run. B) (1 ) people hold adaptive expectations, and (2 ) wages and prices are inflexible. C) (1 ) people hold rational expectations, and (2 ) wages and prices are flexible. D) (1 ) people hold neither adaptive nor rational expectations and (2 ) prices are inflexible. E) none of the above