QUIZ-III-ECO-3203-F2003-sola

C eliminates the problems that cause credit market

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: nsumers to borrow more. c) eliminates the problems that cause credit market imperfections. d) encourages more private saving. Answer: (b) 31) The condition, MRS l ,C = w , describes the representative consumer’s a) investment decision. b) consumption – savings decision. c) current period work – leisure decision. d) future period work – leisure decision. Answer: (c) 32) The condition, MRS l ',C ' = w' , describes the representative consumer’s a) investment decision. b) consumption – savings decision. c) current period work – leisure decision. d) future period work – leisure decision. Answer: (d) 33) The condition, MRS C ,C ' = 1 + r , describes the representative consumer’s a) investment decision. b) consumption – savings decision. c) current period work – leisure decision. d) future period work – leisure decision. Answer: (b) 6 34) The assumption that current-period labor supply is positively related to the current-period real wage is justified as long as the a) income effect dominates the substitution effect in the short run. b) income effect dominates the substitution effect in the long run. c) substitution effect dominates the income effect in the short run. d) substitution effect dominates the income effect in the long run. Answer: (c) 35) The intertemporal substitution of leisure effect is used to justify the assumption that current labor supply increases when the a) current real wage increases. b) current real wage increases. c) real interest rate increases. d) real interest rate increases. Answer: (c) OR (d) 36) Any increase in the present value of taxes for the consumer implies a) an increase in lifetime wealth and an increase in current labor supply. b) an increase in lifetime wealth and a decrease in current labor supply. c) a decrease in lifetime wealth and an increase in current labor supply. d) a decrease in lifetime wealth and a decrease in current labor supply. Answer: (c) 37) The assumption that current-period consumption demand is positively related to the real interest rate is justified as long as the a) income effect dominates the substitution ef...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online