7. If a consumer views a unit of consumption in period 1 as a perfect substitute (one for one) for a unit of consumption in period 2 and if the real interest rate is positive, the consumer will consume only in period 1. consume only in period 2. А. В. С. consume equal amounts in each period. D. consume more in period 1 than in period 2 if income elasticity exceeds 1, otherwise consume more in period 2 than in period 1. E. equalize expenditures but not consumption in the two periods. 8. The nominal interest rate is 2% and the inflation rate is 3%. A rational consumer А. will not save since the real interest rate is negative. В. will save less than 1% of her income. С. will save the same amount regardless of the inflation rate; only the nominal interest rate matters. D. might save despite the negative real interest rate. E. will necessarily save less if the inflation rate rises and the nominal interest rate does

7. If a consumer views a unit of consumption in period 1 as a perfect substitute (one for one) for a unit of consumption in period 2 and if the real interest rate is positive, the consumer will consume only in period 1. consume only in period 2. А. В. С. consume equal amounts in each period. D. consume more in period 1 than in period 2 if income elasticity exceeds 1, otherwise consume more in period 2 than in period 1. E. equalize expenditures but not consumption in the two periods. 8. The nominal interest rate is 2% and the inflation rate is 3%. A rational consumer А. will not save since the real interest rate is negative. В. will save less than 1% of her income. С. will save the same amount regardless of the inflation rate; only the nominal interest rate matters. D. might save despite the negative real interest rate. E. will necessarily save less if the inflation rate rises and the nominal interest rate does

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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