Question 1

An increase in the interest rate:

Accepted Answer

A) makes future consumption cheaper. 
B) decreases future income. 
C) makes present consumption cheaper. 
D) all of the above. 
A) makes future consumption cheaper. 
B) decreases future income. 
C) makes present consumption cheaper. 
D) all of the above.

Question 2

The present value of sources of funds is:

Accepted Answer

A) the value of initial assets plus the present value of wage income plus the present value of assets at the end of year two. 
B) the value of initial assets plus the present value of assets at the end of year two. 
C) the present value of wage income plus the present value of assets at the end of year two. 
D) the value of initial assets plus the present value of wage income. 
A) the value of initial assets plus the present value of wage income plus the present value of assets at the end of year two. 
B) the value of initial assets plus the present value of assets at the end of year two. 
C) the present value of wage income plus the present value of assets at the end of year two. 
D) the value of initial assets plus the present value of wage income.

Question 3

Real household saving is:

Accepted Answer

A)    B +   K 
B)    B + (   K/P) 
C) (   B/P) +   K 
D) (   B/P) + (   K/P) 
A)    B +   K 
B)    B + (   K/P) 
C) (   B/P) +   K 
D) (   B/P) + (   K/P)

Question 4

What is an income effect and what can cause one?

Accepted Answer

When households change their b

Question 5

The marginal propensity to consume out of a permanent change in income is approximately:

Accepted Answer

A) 1 
B) 0.5 
C) 0 
D) none of the above. 
A) 1 
B) 0.5 
C) 0 
D) none of the above.

Question 6

If the present value of assets at the end of year two is constant, an increase in the present value of sources of funds must cause:

Accepted Answer

A) consumption in periods one and two to rise. 
B) consumption in periods one and two to fall. 
C) consumption to rise in period one and fall in period two. 
D) consumption to fall in period one and rise in period two. 
A) consumption in periods one and two to rise. 
B) consumption in periods one and two to fall. 
C) consumption to rise in period one and fall in period two. 
D) consumption to fall in period one and rise in period two.

Question 7

A yen today is worth more than a yen a year from now as long as:

Accepted Answer

A) the interest rate is negative. 
B) the interest rate is positive. 
C) the depreciation rate is negative. 
D) the depreciation rate is positive. 
A) the interest rate is negative. 
B) the interest rate is positive. 
C) the depreciation rate is negative. 
D) the depreciation rate is positive.

Question 8

The marginal propensity to save out of a temporary change in income is approximately:

Accepted Answer

A) 1 
B) 0.5 
C) 0 
D) none of the above. 
A) 1 
B) 0.5 
C) 0 
D) none of the above.

Question 9

An increase in the interest rate can cause an income effect by:

Accepted Answer

A) making future consumption cheaper. 
B) changing real income in year two. 
C) making present consumption cheaper. 
D) all of the above. 
A) making future consumption cheaper. 
B) changing real income in year two. 
C) making present consumption cheaper. 
D) all of the above.

Question 10

Figure 7.1  
-In Figure 7.1 if the household decides to save all of its income, it would be at point:

Accepted Answer

A) F 
B) G 
C) H 
D) I 
A) F 
B) G 
C) H 
D) I

Question 11

An increase in the interest rate:

Accepted Answer

A) makes future consumption cheaper. 
B) increases future income. 
C) makes present consumption more expensive. 
D) all of the above. 
A) makes future consumption cheaper. 
B) increases future income. 
C) makes present consumption more expensive. 
D) all of the above.

Question 12

If the interest rate is greater than zero, then the concept of present value is that a dollar today:

Accepted Answer

A) is worth more than a dollar a year from now. 
B) is worth less than a dollar a year from now. 
C) will be worthless a year from now. 
D) is worth the same as a year from now. 
A) is worth more than a dollar a year from now. 
B) is worth less than a dollar a year from now. 
C) will be worthless a year from now. 
D) is worth the same as a year from now.

Question 13

In the one period budget constraint sources of funds include:

Accepted Answer

A) capital gains. 
B) income from capital. 
C) income from rising prices. 
D) all of the above. 
A) capital gains. 
B) income from capital. 
C) income from rising prices. 
D) all of the above.

Question 14

The marginal propensity to save out of a permanent change in income is approximately:

Accepted Answer

A) 1 
B) 0.5 
C) 0 
D) none of the above. 
A) 1 
B) 0.5 
C) 0 
D) none of the above.

Question 15

In the one period budget constraint sources of funds include:

Accepted Answer

A) labour income. 
B) income from capital. 
C) income from bonds. 
D) all of the above. 
A) labour income. 
B) income from capital. 
C) income from bonds. 
D) all of the above.

Question 16

If a worker receives a onetime bonus we would expect them to:

Accepted Answer

A) save most of it. 
B) refuse it. 
C) consume most of it. 
D) consume half and save half of it. 
A) save most of it. 
B) refuse it. 
C) consume most of it. 
D) consume half and save half of it.

Question 17

What are the effects of an increase in the interest rate on the choice of consumption over time?

Accepted Answer

A higher interest rate increases the opp

Question 18

Figure 7.1  
-In Figure 7.1 if the household moves from point G to point H on its budget, it would be:

Accepted Answer

A) saving and consuming more. 
B) saving less and consuming more. 
C) saving more and consuming less. 
D) saving and consuming less. 
A) saving and consuming more. 
B) saving less and consuming more. 
C) saving more and consuming less. 
D) saving and consuming less.

Question 19

In the one period budget constraint sources of funds include:

Accepted Answer

A) labour income. 
B) interests bearing money. 
C) capital gains. 
D) all of the above. 
A) labour income. 
B) interests bearing money. 
C) capital gains. 
D) all of the above.

Question 20

Real income is:

Accepted Answer

A) wL + i(B+K) 
B) (w/P)L + i((B/P)+ K) 
C) (w/P)L + i((B/P)+(K/P)) 
D) (w/P)L + i(B+ K) 
A) wL + i(B+K) 
B) (w/P)L + i((B/P)+ K) 
C) (w/P)L + i((B/P)+(K/P)) 
D) (w/P)L + i(B+ K)

An increase in the interest rate:

The present value of sources of funds is:

Real household saving is:

What is an income effect and what can cause one?

The marginal propensity to consume out of a permanent change in income is approximately:

If the present value of assets at the end of year two is constant, an increase in the present value of sources of funds must cause:

A yen today is worth more than a yen a year from now as long as:

The marginal propensity to save out of a temporary change in income is approximately:

An increase in the interest rate can cause an income effect by:

Figure 7.1 -In Figure 7.1 if the household decides to save all of its income, it would be at point:

An increase in the interest rate:

If the interest rate is greater than zero, then the concept of present value is that a dollar today:

In the one period budget constraint sources of funds include:

The marginal propensity to save out of a permanent change in income is approximately:

In the one period budget constraint sources of funds include:

If a worker receives a onetime bonus we would expect them to:

What are the effects of an increase in the interest rate on the choice of consumption over time?

Figure 7.1 -In Figure 7.1 if the household moves from point G to point H on its budget, it would be:

In the one period budget constraint sources of funds include:

Real income is:

Thinking About Macroeconomics

National-Income Accounting: Gross Domestic Product and the Price Level

Introduction to Economic Growth

Working With the Solow Growth Model

Conditional Convergence and Long-Run Economic Growth

Macroeconomics Without Microeconomic Foundations

Markets, Prices, Supply, and Demand

An Equilibrium Business-Cycle Model

Capital Utilization and Unemployment

The Demand for Money and the Price Level

Inflation, Money Growth, and Interest Rates

Government Expenditure

Taxes

Public Debt

Money and Business Cycles I: the Price-Misperceptions Model

Money and Business Cycles Ii: Sticky Prices and Nominal Wage Rates

World Markets in Goods and Credit

Exchange Rates

Filters

Exam 8: Consumption, Saving, and Investment

An increase in the interest rate:

The present value of sources of funds is:

Real household saving is:

What is an income effect and what can cause one?

The marginal propensity to consume out of a permanent change in income is approximately:

If the present value of assets at the end of year two is constant, an increase in the present value of sources of funds must cause:

A yen today is worth more than a yen a year from now as long as:

The marginal propensity to save out of a temporary change in income is approximately:

An increase in the interest rate can cause an income effect by:

Figure 7.1 -In Figure 7.1 if the household decides to save all of its income, it would be at point:

An increase in the interest rate:

If the interest rate is greater than zero, then the concept of present value is that a dollar today:

In the one period budget constraint sources of funds include:

The marginal propensity to save out of a permanent change in income is approximately:

In the one period budget constraint sources of funds include:

If a worker receives a onetime bonus we would expect them to:

What are the effects of an increase in the interest rate on the choice of consumption over time?

Figure 7.1 -In Figure 7.1 if the household moves from point G to point H on its budget, it would be:

In the one period budget constraint sources of funds include:

Real income is:

Thinking About Macroeconomics

National-Income Accounting: Gross Domestic Product and the Price Level

Introduction to Economic Growth

Working With the Solow Growth Model

Conditional Convergence and Long-Run Economic Growth

Macroeconomics Without Microeconomic Foundations

Markets, Prices, Supply, and Demand

An Equilibrium Business-Cycle Model

Capital Utilization and Unemployment

The Demand for Money and the Price Level

Inflation, Money Growth, and Interest Rates

Government Expenditure

Taxes

Public Debt

Money and Business Cycles I: the Price-Misperceptions Model

Money and Business Cycles Ii: Sticky Prices and Nominal Wage Rates

World Markets in Goods and Credit

Exchange Rates

Filters