Most statistical studies on the relationship between real interest rates and saving conclude that higher real interest rates
a. increase saving.
b. tend to decrease saving.
c. tend to decrease both consumption and saving.
d. have no effect on saving.
d
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In one day, Sue can change the oil on 20 cars or change the tires on 20 cars. In one day, Fred can change the oil on 20 cars or change the tires on 10 cars. Sue and Fred can gain from trade if Sue changes the ________ and Fred changes the ________
A) tires; oil B) oil; oil C) oil; tires D) tires; tires
A firm using a two-part tariff can produce the economically efficient outcome by
A) making the fixed-fee portion of the price as low as possible. B) setting the fixed-fee portion of the price at some proportion to the fixed cost of production. C) setting the per-unit portion of the price equal to the average cost of production. D) setting the per-unit portion of the price equal to the marginal cost of production.
What is the maximum amount an investor should be willing to pay for a two-year $200 annuity, if the best alternative investment earns 20 percent per annum?
a. $305.56 b. $166.67 c. $138.89 d. $268.79
The law of one price (LOOP) indicates that:
a. The nominal wage rate in one country should be equal to the exchange-rate-adjusted wage of the average laborer in another country. b. The price of a good in one country should be equal to the exchange-rate-adjusted price of the same product in another country. c. The quantity produced of a good in one country should be equal to the exchange-rate-adjusted quantity produced of the same product in another country. d. None of the above. e. Nominal interest rates in countries should be identical because if they were not, arbitragers could make risk-free profits.