If a consumer borrows at an interest rate greater than the interest rate at which he or she can lend, then
A) banks cannot make a profit.
B) the budget constraint has a kink at the endowment point.
C) the consumer must be a lender.
D) this makes no difference for consumer behavior.
B
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How does the aggregate demand and aggregate supply model return to long-run equilibrium after an increase in spending growth?
A. The SRAS curve shifts up and to the left as inflation expectations adjust. B. The AD curve shifts back to the left as inflation expectations adjust. C. The AD curve shifts out to the right as inflation expectations adjust. D. The SRAS curve shifts down and to the left as inflation expectations adjust.
A 2 percent increase in the price of neckties leads to a 5 percent decrease in the quantity demanded of neckties. The absolute price elasticity of demand is
A) 2.5. B) 1. C) 0.4. D) 0.2.