Jordan is planning ahead for retirement and must decide how much to spend and how much to save while he's working in order to have money to spend when he retires. When the income effect dominates the substitution effect, an increase in the interest rate on savings will cause him to
a. decrease his savings rate.
b. increase his savings rate.
c. continue saving at the current rate.
d. Any of the above could be correct.
a
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According to monetarists,
a. businesses and households are the primary source of instability in the economy. b. the Federal Reserve causes instability in the economy primarily by allowing instability in the money demand that determines the level of economic activity. c. the government can stabilize the economy by interfering with the normal misadjustment mechanisms in the private sector. d. All of the above e. None of the above
A firm producing a smoke externality is producing
a. more than the socially optimal quantity of output. b. less than the socially optimal quantity of output. c. exactly the socially optimal quantity of output. d. There is insufficient information to answer.