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-Your high school economics teacher recently saw the graph of personal savings rate below.She knows you are taking economics in college and is curious to hear your opinion about what is causing the general trends in saving rates from 1980 to today.What do you tell her? -Your high school economics teacher recently saw the graph of personal savings rate below.She knows you are taking economics in college and is curious to hear your opinion about what is causing the general trends in saving rates from 1980 to today.What do you tell her?

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First,consider the years 1980-2005.More ...

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The intertemporal budget constraint is written as:


A) The intertemporal budget constraint is written as: A) . B) . C) . D) . E) . .
B) The intertemporal budget constraint is written as: A) . B) . C) . D) . E) . .
C) The intertemporal budget constraint is written as: A) . B) . C) . D) . E) . .
D) The intertemporal budget constraint is written as: A) . B) . C) . D) . E) . .
E) The intertemporal budget constraint is written as: A) . B) . C) . D) . E) . .

F) C) and D)
G) A) and E)

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Individuals who have restricted access to credit markets must rely on transitory income to pay for unexpected expenses.

A) True
B) False

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Suppose Suppose , ,R = 0.05;and assuming logarithmic utility,what is consumption in the future? A) $75,000 B) $35,714.29 C) $39,375 D) $37,500 E) not enough information , Suppose , ,R = 0.05;and assuming logarithmic utility,what is consumption in the future? A) $75,000 B) $35,714.29 C) $39,375 D) $37,500 E) not enough information ,R = 0.05;and assuming logarithmic utility,what is consumption in the future?


A) $75,000
B) $35,714.29
C) $39,375
D) $37,500
E) not enough information

F) C) and D)
G) B) and D)

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Are all households homogeneous and rational,at least as defined by economists?

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Answers will vary.But overall,no,the evi...

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Precautionary savings leads households to act as if they are ___________ when they are not.


A) going to last forever
B) facing declines in the stock market
C) staring death in the eye
D) credit constrained
E) unemployed

F) B) and C)
G) B) and E)

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Behaviorial economics treats all households as heterogenous.

A) True
B) False

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According to one study,consumption expenditure falls about 17 percent when an individual retires,but remains,more or less,unchanged when all that is considered is food purchases.

A) True
B) False

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In the special case where b = 1 and with logarithmic utility,the Euler equation is given by:


A) In the special case where b = 1 and with logarithmic utility,the Euler equation is given by: A) . B) . C) . D) . E) . .
B) In the special case where b = 1 and with logarithmic utility,the Euler equation is given by: A) . B) . C) . D) . E) . .
C) In the special case where b = 1 and with logarithmic utility,the Euler equation is given by: A) . B) . C) . D) . E) . .
D) In the special case where b = 1 and with logarithmic utility,the Euler equation is given by: A) . B) . C) . D) . E) . .
E) In the special case where b = 1 and with logarithmic utility,the Euler equation is given by: A) . B) . C) . D) . E) . .

F) C) and E)
G) B) and E)

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If moving an extra unit of today's consumption to future consumption improves your lifetime utility,you are not


A) equalizing consumption over time.
B) satisfying the Euler equation.
C) satisfying your intertemporal budget constraint.
D) putting enough into increasing your family wealth.
E) paying enough taxes to finance Social Security.

F) A) and B)
G) C) and D)

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In the intertemporal budget constraint In the intertemporal budget constraint Is: A) equal to future borrowing. B) today's saving for the future. C) equal to zero. D) the rate of return on financial wealth. E) future savings. Is:


A) equal to future borrowing.
B) today's saving for the future.
C) equal to zero.
D) the rate of return on financial wealth.
E) future savings.

F) A) and E)
G) C) and D)

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The utility function is constructed in such a way that consumption exhibits diminishing marginal utility.

A) True
B) False

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Who was one of the originators of the neoclassical consumption model?


A) Robert Barro
B) David Ricardo
C) Irving Fisher
D) Robert Solow
E) Paul Samuelson

F) B) and C)
G) A) and B)

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In the intertemporal budget constraint, In the intertemporal budget constraint, Is: A) lifetime income. B) total lifetime wealth. C) today's wages. D) a household stock of bank savings. E) future wealth. Is:


A) lifetime income.
B) total lifetime wealth.
C) today's wages.
D) a household stock of bank savings.
E) future wealth.

F) B) and E)
G) C) and E)

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In the text In the text Is given by: A) . B) . C) . D) . E) . Is given by:


A) In the text Is given by: A) . B) . C) . D) . E) . .
B) In the text Is given by: A) . B) . C) . D) . E) . .
C) In the text Is given by: A) . B) . C) . D) . E) . .
D) In the text Is given by: A) . B) . C) . D) . E) . .
E) In the text Is given by: A) . B) . C) . D) . E) . .

F) A) and E)
G) B) and D)

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Behavioral economics blends economics with:


A) psychology.
B) marketing.
C) physics.
D) anthropology.
E) a and b

F) A) and D)
G) A) and C)

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To analyze Ricardian equivalence using the neoclassical consumption model,we must:


A) remove taxes from the present value of wealth.
B) include inflation in the intertemporal budget constraint.
C) treat the discount factor as greater than one.
D) use nominal,rather than real,interest rates.
E) assume marginal utility is constant.

F) C) and E)
G) A) and D)

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If we lower taxes today but raise them in the future,and if b = 1,


A) household wealth rises because they save less.
B) households will increase today's consumption.
C) present wealth remains unchanged and consumption does not change.
D) the government can rely on households to spend more today.
E) saving today will fall and lifetime consumption rises.

F) B) and D)
G) B) and E)

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