Author Question: In practice, it is usual to assume that, in explaining the impact of a change in interest rates ... (Read 32 times)

geoffrey · **on:** Jun 30, 2018

In practice, it is usual to assume that, in explaining the impact of a change in interest rates ________.

A) the substitution effects outweigh the income effects
B) the income effect outweighs the substitution effect
C) the income and substitution effects cancel out with one another
D) the income effect increases the severity of the substitution effect

Question 2

Constant returns to scale (CRS) implies ________.

A) constant returns to labor
B) constant returns to capital
C) increasing marginal products
D) variable total factor productivity
E) diminishing marginal products