1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
GenaCL600 [577]
3 years ago
11

If Suzette responds to an increase in the interest rate by decreasing her saving, then, for Suzette, Select one: a. consumption

when young and consumption when old are perfect substitutes. b. the increase in the interest rate creates an income effect that is greater than the substitution effect. c. the increase in the interest rate creates a substitution effect that is greater than the income effect. d. consumption when young and consumption when old are perfect complements.
Business
1 answer:
Ilia_Sergeevich [38]3 years ago
8 0

Answer:

b. the increase in the interest rate creates an income effect that is greater than the substitution effect.

Explanation:

Interest rate can be regarded as amount that is been charged by lender for using an assets, this asset could be cash, goods, and this is usually display as a percentage of the lent principal.

The income effect gives shows how increased purchasing power can impact consumption, substitution effect on other hands, shows how changing relative income as well prices impact consumption. Both economics concepts give expression of changes that occur in the market as well as how this changes impact consumption patterns as regards consumer goods and services.

It should be noted that the increase in the interest rate creates an income effect that is greater than the substitution effect.

You might be interested in
Henry and claudia can claim alyssa for which tax benefits
34kurt
Considering that Alyssa is their young daughter, United States has an  astounding number of tax credits and deductions that are geared towards taxpayers with children, they could claim: Credits, Deductions, exemption, Education Benefits, Education Deductions, and Education Credits, among others.
6 0
3 years ago
Smith Jewelry Store sells 20 pieces of jewelry per day at an average price of $20 per piece. Assume Smith’s cost for the jewelry
Ipatiy [6.2K]

Answer:

$12,000

Explanation:

Take 20 pieces $20 average price per piece 30 days

= $12,000 expected sales for the month

3 0
3 years ago
Which one of the following should earn the most risk premium based on CAPM?
Nina [5.8K]

Answer:

The portfolio with a beta of 1.38 should earn the most risk premium based on CAPM.

The correct answer is B

Explanation:

A diversified portfolio with returns similar to the overall market will not earn the most risk premium because its beta is equal to 1.

A stock with a beta of 1.38 produces the most risk premium because any stock with the highest beta gives the highest risk-premium. This is the correct answer.

A stock with a beta of 0.74 does not provide the highest risk premium.

Us treasury bill does not provide any risk premium since it is the risk-free rate.

A portfolio with a beta of 1.01 does not produce the highest risk premium.

5 0
3 years ago
If the demand for an item increases,what effect will it have an price and quantity? A) price will increase and quantity increas.
vodka [1.7K]

Answer:

A) price will increase and quantity increase.

Explanation:

An increase in demand means more customers are willing and can afford to buy a product. Holding the other factors constant, an increase in demand results in many potential buyers chasing very few goods. The competition for the few goods leads to an increase in their prices. The equilibrium point moves up the graph to a new higher position as a result of an increase in demand.

As per the law of supply, quantity supplied increases as prices rise. Profit motives drive all business establishments. As prices increase due to increased demand, suppliers will be motivated to supply more to take advantage of high prices.

6 0
3 years ago
With its current levels of input use, a firm's MRTS is 1/3 (when capital is on the vertical axis and labor is on the horizontal
bixtya [17]

Answer: A. the firm could produce 3 more units of output if it increased its use of capital by one unit (holding labor constant).

Explanation:

The Marginal Rate of Technical Substitution(MRTS) is calculated as follows:

= Marginal product of labor / Marginal product of capital

= 1 / 3

Marginal product of labor = 1

Marginal product of capital = 3

This means that if one unit of labor is used, it produces 1 unit of output.

If one unit of capital is used however, it produces 3 units of output.

If a firm therefore used one unit of capital and kept labor constant, it could produce 3 units out output.

4 0
2 years ago
Other questions:
  • Randolph is a 30% partner in the rd partnership. on january 1, rd distributes $15,000 cash, inventory with a fair value of $20,0
    15·1 answer
  • In which areas could the applicant exhibit growth or improvement?
    11·1 answer
  • A large country imposes capital controls that prohibit foreign borrowing and lending by domestic residents. The country is curre
    8·1 answer
  • Sarah opened her last month's bank statement, today, to find she had an ending bank balance according to First Bank of Broad Rip
    14·1 answer
  • Sue invested $12,000 in the ABC Limited Partnership and received a 10 percent interest in the partnership. The partnership had $
    6·1 answer
  • Managers of Wendy's fast-food restaurants keep track of prices at competitors such as McDonald's, Burger King, and Arby's, knowi
    6·2 answers
  • The forces that affect foreign markets may differ dramatically from those affecting domestic markets. This makes a careful------
    12·1 answer
  • Ouzts Corporation is considering Alternative A and Alternative B. Costs associated with the alternatives are listed below: Alter
    9·1 answer
  • Suppose a farmer wants to borrow $176,590.00 to buy a tract of land. The BCS bank will make a 22-year loan fully amortized at 6.
    10·1 answer
  • 4.2. Why do you think capital is important?​
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!