If consumption equals $1,000 when income is $1,000 and increases to $1,900 when income increases to $2,000, then the marginal propensity to consume is

The Baumol-Tobin analysis suggests that a decrease in the brokerage fee for buying and selling bonds will cause the demand for money to ________ and the demand for bonds to ________

A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase

Which of the following is NOT true of adverse selection?

A) It would not exist in a world of perfect information. B) It arises because borrowers typically know more than lenders. C) It describes a lender's problem of distinguishing the good-risk applicants from the bad-risk applicants. D) It describes a lender's problem in verifying borrowers are using their funds as intended.