The substitution effect indicates that higher real interest rates ________ current consumption for households who are lenders and ________ current consumption for households who are borrowers
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
D
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India is not a member of the China-ASEAN (Association of South East Asian Nations) free-trade area implemented on January 1, 2010. As a result, India fears that some of its:
a. exports to China will be diverted to ASEAN countries. b. exports to the United States will be diverted to China. c. exports to China and to ASEAN countries will be diverted to trade among members of the China-ASEAN free-trade area. d. imports from ASEAN countries will be diverted to China.
A circular-flow model and production possibilities frontier are similar in that
a. neither allows economic analysis to occur. b. neither can be represented visually on a graph. c. both make use of assumptions. d. both make use of complex equations to arrive at solutions.