Quiz4 chapter 4

Macroeconomics plus MyEconLab plus eBook 1-semester Student Access Kit (6th Edition)

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Quiz This activity contains 15 questions.  The desire to have a relatively smooth pattern of consumption over time is known as the substitution effect. marginal propensity to consume. Ricardian equivalence proposition. consumption-smoothing motive. An increase in expected real interest rates would probably cause desired national saving to rise  because current interest rates would fall in response to higher  expected real interest rates in the future. the government would respond by increasing 
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expenditures. the increased return makes saving more attractive. less must be saved to reach a given saving target. The substitution effect of the real interest rate on saving works in the opposite direction as the income effect on  saving. reflects the tendency to increase current consumption as  the real interest rate increases. reflects the tendency to reduce current consumption as the  real interest rate increases.
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