Homework Answers
A higher rate of return on savings has income effect and substitution effect.
Substitution effect: A higher rate of return leads to increase in savings and decrease in consumption, keeping other factors constant. Hence, substitution effects encourgae the saving when there is higher rate of return.
Income effect: A higher rate of return leads to decrease in savings and increase in consumption, keeping other factors constant. Hence, income effects discourgae the saving when there is higher rate of return.
Answer: Option (A)
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Please answer the following questions: QUESTION 1 An increase in a country's saving rate will tend...
Please answer the following questions:
QUESTION 1 An increase in a country's saving rate will tend to cause which of the following in the long run? O an increase in the unemployment rate O a reduction in per capita real GDP O an increase in the rate of inflation O an increase in economic growth QUESTION 2 Regarding open economies, economists tend to find evidence that o open economies tend to have access to smaller markets than do closed economies....
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1. Consider a variant of the two-period model of consumption-saving behavior. In this version of the...
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a). Empirical evidence suggests that poor countries do not have higher rates of return on capital. Explain why this evid...
a). Empirical evidence suggests that poor countries do not have higher rates of return on capital. Explain why this evidence is at odds with the Solow growth model. b).Using an appropriate diagram, explain the effect of an increase in the population growth rate on the steady-state income per person. Show and explain how the saving rate must change in order for a rise in the population growth rate to leave the steady-state unchanged. Explain your answer intuitively.
Just need the answers please answer in 10 minutes A decrease in the saving rate will...
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1. Give the main reason why two indifference curves can never intersect! 2. Why does a...
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What affect does each of the following items have on net farm
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1) If the substitution effect of the real interest rate on saving is smaller than the income effect of the real interest rate on saving, then a rise in the real interest rate leads to a in consumption and a_ _in saving, for someone who's a lender (saver). A) fall; fall B) fall; rise C) rise; fall D) rise, rise 2) For a borrower, an increase in the real interest rate will lead to A) higher current consumption and less...
Please answer the following questions:
QUESTION 1 An increase in a country's saving rate will tend to cause which of the following in the long run? O an increase in the unemployment rate O a reduction in per capita real GDP O an increase in the rate of inflation O an increase in economic growth QUESTION 2 Regarding open economies, economists tend to find evidence that o open economies tend to have access to smaller markets than do closed economies....
1. Consider a variant of the two-period model of consumption-saving behavior. In this version of the model, the consumer has income y in the first period and no income in the second period. Her life-time budget constraint is c+ a - 1+r = y. (a) Draw this budget constraint in a diagram with con horizontal axis and d on vertical axis. What are the slope and vertical intercept of this budget constraint? Label the endowment point in the diagram. (3...
6. Tax systems and saving This question addresses the impact of saving on an economy by examining what happens if tax laws change to induce saving and how changes in tax laws can discourage saving. The following graph shows the market for loanable funds. Show the impact of a change in the tax law that successfully encourages saving by shifting either the demand curve (D), the supply curve (S), or both. S D s INTEREST RATE D LOANABLE FUNDS A...
What affect does each of the following items have on net farm
income?
Change of Net Farm Income a. increase in crop inventories b. decrease in accounts receivable ncrease c. increase in cash d. decrease in accounts payable icrease e. decrease in prepaid expenses f increase in accrued interest 2. increase in growing crops h. decrease in growing crops Change of Net Farm Income decrease decrease decrease decrease decrease decrease decrease decrease no effect no effect no effect no effect...
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