Which of the following statements is true?
A) If the opportunity cost of current consumption is high, people will save less.
B) If the opportunity cost of current consumption is high, the inflation rate will increase.
C) If the opportunity cost of current consumption is high, the unemployment rate will decrease.
D) If the opportunity cost of current consumption is high, people will save more.
D
You might also like to view...
Suppose that two countries share identical levels of total factor productivity, identical labor force growth rates and identical savings rates. According to the Solow model
A) the country with the greater initial level of output per worker will grow more rapidly than the country with the smaller initial level of output per worker. B) the country with the smaller initial level of output per worker will grow more rapidly than the country with the greater initial level of output per worker. C) both countries will have the same growth rates of output per worker, even if they start out with different levels of output per worker. D) if both countries start out with different levels of income per worker, both countries may have different growth rates of output per worker, but we cannot be certain which country will have the higher growth rate of output per worker.
Within the AD/AS model, if consumers increase their savings and cut back on their spending, the
a. natural rate of unemployment will increase. b. real interest rate will decrease and, thereby, cushion the reduction in consumption spending. c. real interest rate will increase because of the higher rate of saving. d. long-run aggregate supply will decrease to restore equilibrium.