If Consumers Face Higher Interest Rates When Their Savings Is

question 18

Multiple Choice

If consumers face higher interest rates when their savings is positive than when their savings is negative,

• A) Ricardian equivalence holds.
• B) there is no asymmetric information.
• C) the government may be able to increase welfare by cutting taxes.
• D) the size of the government should be reduced.
• E) the economy can do without collateral.

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Definitions:

Two-sample Chi-square

A statistical test used to determine if there is a significant difference between the categorical distributions of two independent samples.

Goodness-of-fit Test

A statistical test used to determine how well observed data fit a specific distribution or model.

Test of Independence

A statistical method used to determine if there is a significant association between two categorical variables.

Nonparametric Tests

Statistical tests that do not assume a specific distribution in the data and are used for ordinal or nominal data.