A mporary increase in income ( e g only in the first period ) leads to B an increase only in current consumption C an increase only in future consumption D an increase in current consumption, saving, and future consumption consumption 1 3 For a borrower, an increase in the real interest rate A reduces current consumption and increases future consumption B has an uncertain effect on current consumption and increases future consumption C reduces current consumption and has an uncertain effect on future consumption D has an uncertain effect on both current and future consumption 1 4 According to the consumer's intertemporal budget constraint, A Current consumption must equal current disposable income B Current consumption must be less than current disposable income C the consumer has to be at their endowment point D Current consumption can exceed current disposable income but not the present value of the consumer's lifetime disposable income 1 5 Limited commitment occurs when A Some borrowers are unable to pay off their debt B Borrowers can walk away from their debt even when they can afford to pay it off C Banks limit lending to only good borrowers D All the above are true 1 6 Which of the following is NOT true about banks requiring collateral to address limited commitment A Collateral requirement limits the maximum amount they can borrow up to the present value of the collateral B Prevents consumers from borrowing against their future income despite being able to afford it C Reduces current consumption for consumers who are liquidity constrained D Increases consumer welfare 1 7 Which of the following is NOT a reason why financial markets act as a mechanism that amplifies and prolongs recessions A The spread between the safe interest rates and borrowing rates rises, making borrowing more expensive B Investment banks take advantage of people in need to increase their profit the amount that people can borrow D Borrowing becomes more costly or difficult, so borrowers end up cuting their

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Question: A . mporary increase in income ( e . g . only in the first period ) leads to B . an increase only in

.

"mporary increase in income

(

.

.

only in the first period

)

leads to

.

an increase only in current consumption.

.

an increase only in future consumption.

.

an increase in current consumption, saving, and future consumption. consumption.

13 .

For a borrower, an increase in the real interest rate

.

reduces current consumption and increases future consumption.

.

has an uncertain effect on current consumption and increases future consumption.

.

reduces current consumption and has an uncertain effect on future consumption.

.

has an uncertain effect on both current and future consumption.

14 .

According to the consumer's intertemporal budget constraint,

.

Current consumption must equal current disposable income.

.

Current consumption must be less than current disposable income.

.

the consumer has to be at their endowment point.

.

Current consumption can exceed current disposable income but not the present value of the consumer's lifetime disposable income.

15 .

Limited commitment occurs when

.

Some borrowers are unable to pay off their debt.

.

Borrowers can walk away from their debt even when they can afford to pay it off.

.

Banks limit lending to only good borrowers.

.

All the above are true.

16 .

Which of the following is NOT true about banks requiring collateral to address limited commitment?

.

Collateral requirement limits the maximum amount they can borrow up to the present value of the collateral.

.

Prevents consumers from borrowing against their future income despite being able to afford it

.

.

Reduces current consumption for consumers who are liquidity constrained.

.

Increases consumer welfare.

17 .

Which of the following is NOT a reason why financial markets act as a mechanism that amplifies and prolongs recessions?

.

The spread between the safe interest rates and borrowing rates rises, making borrowing more expensive.

.

Investment banks take advantage of people in need to increase their profit. the amount that people can borrow.

.

Borrowing becomes more costly or difficult, so borrowers end up cuting their

A . "mporary increase in income ( e . g . only in

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