Given the table above, suppose consumption in period two is $35,000. Then, the interest rate rises to five percent, and period-two consumption falls to $34,900. We may infer that ________
A) the income effect is stronger than the substitution effect
B) the substitution effect is stronger than the income effect
C) the substitution and income effects cancel out
D) this consumer has a binding borrowing constraint
A
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Refer to Figure 2-7. Assume a technological advancement greatly reduces the cost to produce self-driving vehicles. This is best represented by the
A) movement from K to L in Graph C. B) movement from G to H in Graph B. C) movement from H to J in Graph B. D) movement from E to F in Graph A.
Which of the following is most likely to increase the exports of a country?
a. The government gives subsidies to firms that export goods or services. b. The government reduces the size of the budget surplus. c. Political instability within the country increases modestly. d. None of the above will increase exports.