In the two-period model with limited commitment, if the collateral constraint binds
A) increases in the present value of collateral increase current consumption and reduce future consumption.
B) increases in the present value of collateral increase current consumption one-for-one.
C) increases in the present value of collateral decrease current consumption and increase future consumption.
D) increases in the present value of collateral increase current consumption less than one-for-one.
B
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Suppose a change in technology increases the marginal product of labor. The result is
a. a downward movement along the demand for labor curve. b. a rightward shift in the demand for labor curve. c. a leftward shift in the demand for labor curve. d. an upward movement along the demand for labor curve.
According to the Pew Charitable Trust methodology for identifying the middle class, if people near the boundary between the lowest and the lower middle income class lose income, the middle class will ________
A. increase, and that is unambiguously a good thing. B. shrink, but that is unambiguously a good thing. C. shrink, and that is unambiguously a bad thing. D. increase, and that is unambiguously a bad thing.