Question 1

A consumer is a lender if

Accepted Answer

A)  optimum current consumption is less than current disposable income. 
B)  optimum current consumption is greater than current disposable income. 
C)  current disposable income is greater than future disposable income. 
D)  the consumer's indifference curves are relatively flat. 
E)  the consumer's indifference curves are negatively sloped. 
A)  optimum current consumption is less than current disposable income. 
B)  optimum current consumption is greater than current disposable income. 
C)  current disposable income is greater than future disposable income. 
D)  the consumer's indifference curves are relatively flat. 
E)  the consumer's indifference curves are negatively sloped.

Question 2

Aggregate consumption is

Accepted Answer

A)  positively related to savings. 
B)  negatively related to real GDP. 
C)  more volatile than aggregate income. 
D)  less variable than aggregate income. 
E)  more variable than savings. 
A)  positively related to savings. 
B)  negatively related to real GDP. 
C)  more volatile than aggregate income. 
D)  less variable than aggregate income. 
E)  more variable than savings.

Question 3

The phenomenon that some consumers pay a higher interest rate when they borrow than the interest rate they receive when they lend is best described as an example of

Accepted Answer

A)  irrational behavior. 
B)  a credit market imperfection. 
C)  a vast banking conspiracy. 
D)  the burden of public debt. 
E)  competitive disequilibrium. 
A)  irrational behavior. 
B)  a credit market imperfection. 
C)  a vast banking conspiracy. 
D)  the burden of public debt. 
E)  competitive disequilibrium.

Question 4

An increase in the real interest

Accepted Answer

A)  increases savings for both borrowers and lenders. 
B)  increases savings for borrowers, but has an uncertain effect on the savings of lenders. 
C)  increases savings for lenders, but has an uncertain effect on the savings of borrowers. 
D)  has an uncertain effect on the savings of both borrowers and lenders. 
E)  reduces savings for both borrowers and lenders. 
A)  increases savings for both borrowers and lenders. 
B)  increases savings for borrowers, but has an uncertain effect on the savings of lenders. 
C)  increases savings for lenders, but has an uncertain effect on the savings of borrowers. 
D)  has an uncertain effect on the savings of both borrowers and lenders. 
E)  reduces savings for both borrowers and lenders.

Question 5

Intertemporal decisions involve economic decisions

Accepted Answer

A)  made within a given period of time. 
B)  made in between two periods of time. 
C)  involving tradeoffs across periods of time. 
D)  that ignore concerns about the future. 
E)  that are made only once. 
A)  made within a given period of time. 
B)  made in between two periods of time. 
C)  involving tradeoffs across periods of time. 
D)  that ignore concerns about the future. 
E)  that are made only once.

Question 6

In order for the government to sustain a primary deficit forever,

Accepted Answer

A)  real GDP must grow faster than the real interest rate. 
B)  real GDP must grow slower than the real interest rate. 
C)  it must borrow from other governments. 
D)  it must eventually lend to other governments. 
E)  real GDP must grow at the same rate as the real interest rate. 
A)  real GDP must grow faster than the real interest rate. 
B)  real GDP must grow slower than the real interest rate. 
C)  it must borrow from other governments. 
D)  it must eventually lend to other governments. 
E)  real GDP must grow at the same rate as the real interest rate.

Question 7

The private supply of credit is an increasing function of the real interest rate if

Accepted Answer

A)  the substitution effects outweighs the income effects when added across all consumers. 
B)  the income effects outweighs the substitution effects when added across all consumers. 
C)  the income effect outweighs the substitution effects for borrowers. 
D)  the substitution and income effects cancel each other. 
E)  consumers are rational. 
A)  the substitution effects outweighs the income effects when added across all consumers. 
B)  the income effects outweighs the substitution effects when added across all consumers. 
C)  the income effect outweighs the substitution effects for borrowers. 
D)  the substitution and income effects cancel each other. 
E)  consumers are rational.

Question 8

The two primary explanations for the excess volatility of consumption are

Accepted Answer

A)  consumers' limited life spans and credit market imperfections. 
B)  credit market imperfections and changes in market prices. 
C)  changes in market prices and distorting taxes. 
D)  distorting taxes and consumers' limited life spans. 
E)  changes in market prices and consumer's limited life spans. 
A)  consumers' limited life spans and credit market imperfections. 
B)  credit market imperfections and changes in market prices. 
C)  changes in market prices and distorting taxes. 
D)  distorting taxes and consumers' limited life spans. 
E)  changes in market prices and consumer's limited life spans.

Question 9

If government spending is held constant and Ricardian equivalence holds,

Accepted Answer

A)  an increase in the government budget deficit is always matched by a reduction in private savings. 
B)  an increase in government savings is always matched by an increase in the government budget deficit. 
C)  an increase in government savings is always matched by an equal increase in private savings. 
D)  an increase in government savings is always matched by an equal reduction in private savings. 
E)  an increase in government savings is always matched by an increase in the real interest rate. 
A)  an increase in the government budget deficit is always matched by a reduction in private savings. 
B)  an increase in government savings is always matched by an increase in the government budget deficit. 
C)  an increase in government savings is always matched by an equal increase in private savings. 
D)  an increase in government savings is always matched by an equal reduction in private savings. 
E)  an increase in government savings is always matched by an increase in the real interest rate.

A consumer is a lender if

Aggregate consumption is

The phenomenon that some consumers pay a higher interest rate when they borrow than the interest rate they receive when they lend is best described as an example of

An increase in the real interest

Intertemporal decisions involve economic decisions

In order for the government to sustain a primary deficit forever,

The private supply of credit is an increasing function of the real interest rate if

The two primary explanations for the excess volatility of consumption are

If government spending is held constant and Ricardian equivalence holds,

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters

Exam 9: A Two-Period Model: The Consumption–Savings Decision and Credit Markets

A consumer is a lender if

Aggregate consumption is

The phenomenon that some consumers pay a higher interest rate when they borrow than the interest rate they receive when they lend is best described as an example of

An increase in the real interest

Intertemporal decisions involve economic decisions

In order for the government to sustain a primary deficit forever,

The private supply of credit is an increasing function of the real interest rate if

The two primary explanations for the excess volatility of consumption are

If government spending is held constant and Ricardian equivalence holds,

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters