According to Modigliani's life-cycle hypothesis, the
a. MPC for young adults is relatively low
b. middle-aged experience their highest and most rapidly growing MPCs
c. MPC falls during middle-age
d. MPC falls during old age
e. MPC is constant throughout a lifetime
C
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Long-run aggregate supply shocks are not a source of business cycle fluctuations in the ________, because ________
A) traditional Keynesian model; long-run supply shocks are incompatible with adaptive expectations B) traditional Keynesian model; demand fluctuations are considered of dominant importance C) real business cycle model; shocks cannot persist in the long run, when prices and wages are flexible D) new Keynesian model; such shocks are anticipated by forward-looking consumers and firms
When banks create money, they
a. increase wealth at a pace equal to the rate of money creation b. destroy wealth at a pace equal to the rate of money creation c. increase wealth at a rate exceeding the rate of money creation d. increase wealth at a rate less than the rate of money creation e. do not create wealth
Suppose the interest rate is 3% and that you are to receive three annual payments of $1,000, with the first payment today, the second payment one year from now, and the third payment two years from now. What is the present value of this stream of payments?
If a linear, two-good production possibilities curve has a slope of ?2, then:
A. having an additional unit of the good measured on the vertical axis means giving up ½ of a unit of the good measured on the horizontal axis. B. you have an absolute advantage in the good measured on the vertical axis. C. having an additional unit of the good measured on the vertical axis means giving up 2 units of the good measured on the horizontal axis. D. you have a comparative advantage in the good measured on the vertical axis.