For a consumer bound by the collateral constraint, a reduction in ...

[Tazate]

For a consumer bound by the collateral constraint, a reduction in the price of the collateral leads to
 
  A) nothing.
  B) an increase in current consumption and a decrease in future consumption.
  C) a decrease in current consumption and no change in future consumption.
  D) a decrease in current and future consumption.

Question 2

What is meant by real Gross Domestic Product? How do you think that you calculate a real statistic?
 
  What will be an ideal response?

[ciecieme]

Answer to Question 1

C

Answer to Question 2

Real Gross Domestic product measures total output in the U.S. adjusted for changes in the price level. The easiest way to calculate a real statistic is to use a constant set of prices across every year.