If the substitution effect is stronger than the income effect, a decrease in real interest rates will ________ current consumption for households who are lenders and will ________ current consumption for households who are borrowers
A) increase; decrease
B) decrease; increase
C) increase; increase
D) increase; have an unclear effect on
C
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A reason why a firm's demand for labor curve slopes downward is that, holding everything else constant,
A) the extra cost of hiring additional units of labor increases as a firm hires more units of labor. B) as more labor is hired, labor's marginal product falls due to diminishing marginal returns. C) the firm's demand curve for the product produced by the labor is downward sloping. D) each additional unit of labor hired is less efficient than previously hired units.
The demand for loanable funds is downsloping:
A. because businesses find that more investments are profitable at low interest rates than at high interest rates. B. because households are willing to save more at high interest rates than at low interest rates. C. only when the nominal interest rate exceeds the real interest rate. D. because the amount of profitable business investment varies directly with the interest rate.
Capital gains tax liabilities usually
A. must be recognized and paid by the estate of the decedent upon death. B. are recognized only upon the sale of a capital asset. C. are recognized before the sale of a capital asset as the gain actually accrues. D. do not include any taxation of actual inflation.
Owners face unlimited liability in
A. national corporations and global corporations. B. proprietorships and partnerships. C. partnerships and corporations. D. proprietorships and corporations.