In the consumption function model, the 45-degree line represents where
A) the real disposable income is equal to zero.
B) planned real saving is equal to zero.
C) planned real consumption spending is equal to zero.
D) planned real saving is greater than actual real savings.
Answer: B. planned real saving is equal to zero.
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We would expect the interest rate on Bond A to be higher than the interest rate on Bond B if the two bonds have identical characteristics except that
a. the credit risk associated with Bond A is lower than the credit risk associated with Bond B. b. Bond A was issued by the city of Philadelphia and Bond B was issued by Red Hat Corporation. c. Bond A has a term of 20 years and Bond B has a term of 2 years. d. All of the above are correct.
Which of the following accurately describes the motivation behind predatory pricing?
a. to drive out competitors b. to increase sales c. to tie goods together d. to attract new customers