An increase in interest rate makes all households worse off

Assignment Help Business Economics

Reference no: EM131003465

True, false or uncertain. Explain why.

1) TFU: Because of diminishing returns to consumption, a household would be less than twice as happy if nominal income and nominal prices all doubled.

2) TFU: an increase in the interest rate makes all households worse off.

3) TFU: if a household is neither borrowing nor lending, any change in the interest rate makes them better off.

4) TFU: The difference between the price of a nominal bond paying off $1 in nominal terms tomorrow and the price of a real bond paying off $1 in real terms tomorrow is the price level.

Reference no: EM131003465

Questions Cloud

Analysis of the great depression : Essay Question: Summarize Keynes’ analysis of the Great Depression and the specific actions that would correct the sustained economic downturn. What actions were taken?

Human resource, political, and symbolic frames : Throughout the course you have been analyzing a specific situation you have encountered, using the Structural, Human Resource, Political, and Symbolic Frames to analyze what happened in your personal case.

Decided to change how she compensated her top manager : Recently, the owner of a Trader Joe’s franchise decided to change how she compensated her top manager. Last year, she paid him a fixed salary of $55,000 and her store made $115,000 in profits (not counting payment to her top manager). She suspected t..

Identify the substitution effect of the price change : Consider three agents with the respective utility functions: uA(x,y)= xy (MRS(x,y)= y) x uB (x, y) = x + y (perfect substitutes) uC (x, y) = min{x, y} (perfect complements) Assume each agent has income $120 and initially faces the prices px = $1 and ..

An increase in interest rate makes all households worse off : Because of diminishing returns to consumption, a household would be less than twice as happy if nominal income and nominal prices all doubled. an increase in the interest rate makes all households worse off. if a household is neither borrowing nor le..

What is the most critical risk for any project : What methods other than the ones described in your text can you suggest for identifying project risks? What other methods can you use to assess those risks? Which group of risks (internal, external) is more critical to a project and why?What is the m..

Based on how taxable income is determined : Based on how taxable income is determined, how might temporary differences be created between taxable income and pretax income in the income statement?

Explain bains limit pricing theory : Explain bains limit pricing theory. Please make sure to provide detail study of "bains limit pricing theory" and make it proper citation in end of the report.

Find a report published by a corporation and critique it : I would like you to find a report or proposal published by a corporation and critique it based on the information learned in chapters 17 and 18. This could be a financial report, corporate citizenship report, etc. How did the company come up with..

User Account

All Pages