Changes in the equilibrium real interest rate as a result of policy, demographic and technological shifts...

 

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Changes in the equilibrium real interest rate as a result of policy, demographic and technological shifts Percentage points 1971 1991 1981 Government debt (life cycle) Government spending Old-age healthcare Population growth Length of working life Interactions -o-Estimated decline in AE R* wwwwwww 2001 2011 Long-run Government debt (incomplete markets) Social Security Long-term growth expectations Longer retirement Inequality -Total response of R* in the GE models Private sector R* 5 4 3 2 0 -1 -7 Time left 0:58: Which of the below statements about this graph is NOT correct? Select one: a. More government-provided old-age health care makes people less likely to save for their own health care, resulting in less demand for deposit and bond assets, pushing prices lower and yields higher. O b. Longer retirement and longer life expectancy lead people to save more and sustain themselves through retirement, resulting in more demand for debt assets, pushing prices higher and yields lower. Oc. More government debt liabilities reflect increased government supply for bonds, pushing prices lower and yields higher. Od. Higher inequality leads to higher marginal propensities to spend because rich people will consume most of their wealth, resulting in more demand for Changes in the equilibrium real interest rate as a result of policy, demographic and technological shifts Percentage points 1971 1991 1981 Government debt (life cycle) Government spending Old-age healthcare Population growth Length of working life Interactions -o-Estimated decline in AE R* wwwwwww 2001 2011 Long-run Government debt (incomplete markets) Social Security Long-term growth expectations Longer retirement Inequality -Total response of R* in the GE models Private sector R* 5 4 3 2 0 -1 -7 Time left 0:58: Which of the below statements about this graph is NOT correct? Select one: a. More government-provided old-age health care makes people less likely to save for their own health care, resulting in less demand for deposit and bond assets, pushing prices lower and yields higher. O b. Longer retirement and longer life expectancy lead people to save more and sustain themselves through retirement, resulting in more demand for debt assets, pushing prices higher and yields lower. Oc. More government debt liabilities reflect increased government supply for bonds, pushing prices lower and yields higher. Od. Higher inequality leads to higher marginal propensities to spend because rich people will consume most of their wealth, resulting in more demand for

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