Jordan is planning ahead for retirement and must decide how much to spend and how much to save while he's working in order to have money to spend when he retires. When the income effect dominates the substitution effect, an increase in the interest rate on savings will cause him to
a. decrease his savings rate.
b. increase his savings rate.
c. continue saving at the current rate.
d. Any of the above could be correct.
a
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Which of the following is NOT related to fiscal policy?
A) increasing government expenditures B) decreasing marginal tax rates C) passage of new securities laws D) reducing the budget deficit
"A perfectly competitive firm will shut down if the price falls below its average total cost." Do you agree? Explain
What will be an ideal response?
Refer to Figure 27-3. In the graph above, suppose the economy is initially at point A. The movement of the economy to point B as shown in the graph illustrates the effect of which of the following policy actions by Congress and the president?
A) a decrease in government purchases B) a decrease in income taxes C) a decrease in interest rates D) an increase in the money supply
Suppose the Fed conducts an open market sale of bonds. This monetary policy action will tend to cause
A) the price of bonds to increase and the interest rate to increase. B) the price of bonds to increase and the interest rate to decrease. C) the price of bonds to decrease and the interest rate to increase. D) the price of bonds to decrease and the interest rate to decrease.