Assume households have positive wealth. If the income effect is ________ the substitution effect, a decrease in interest rates will increase saving and decrease consumption spending by households.
A. greater than
B. unrelated to
C. less than
D. equal to
Answer: A
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Applying for a loan in five-person groups is an example of:
A. family and friends lending. B. party of five lending. C. group responsibility. D. trade-off.
The opportunity cost of a particular activity is the sum of the benefits that could have been received from all foregone activities
a. True b. False
A demand shock that increases real GDP above its full-employment level will, in the long run,
a. lead to a higher wage rate and an upward shift of the aggregate supply curve b. lead to a lower wage rate and a downward shift of the aggregate supply curve c. lead to a higher wage rate and a rightward shift of the aggregate demand curve d. lead to a lower wage rate and a leftward shift of the aggregate demand curve e. cause no further shifts in the aggregate supply or aggregate demand curve
When marginal product is rising
A) total product is falling. B) marginal cost is falling. C) marginal cost is rising. D) average fixed cost is rising.