Suppose consumers anticipate that their wealth will grow over time, because of interest earnings and capital gains. According to the life-cycle hypothesis, such optimism should cause current consumption to be ________

In 1973, the Organization of Petroleum Exporting Countries (OPEC) engineered a quadrupling of oil prices by restricting oil production. Which of the following is an appropriate description of this negative supply shock?

A) The AS curve likely shifted to the left and output likely fell because of this adverse shock. B) In the short-run there was a movement out of general equilibrium leading to an increase in inflation as a likely result of this adverse shock. C) In the short-run there was a movement out of general equilibrium leading to an increase in unemployment as a likely result of this adverse shock. D) all of the above E) none of the above

Because the nominal interest rate is always positive, the discount factor is always

A) negative. B) greater than one. C) zero. D) less than one.