In a Two-Period Model, as Long as Wealth Effects Are

question 32

Multiple Choice

In a two-period model, as long as wealth effects are small, an increase in the world real interest rate

• A) increases consumption and increases the current account surplus.
• B) increases consumption and decreases the current account surplus.
• C) decreases consumption and increases the current account surplus.
• D) increases investment.
• E) decreases consumption and decreases the current account surplus.

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Definitions:

Norepinephrine

A neurotransmitter whose action is similar to that of the hormone epinephrine and that may play a role in depression.

Successive Approximations

In operant conditioning, a series of behaviors that gradually become more similar to a target behavior.

Target Behavior

A specific behavior that is selected for change or intervention in a behavior modification program.

Systematic Desensitization

A behavioral therapy method used to gradually reduce anxiety by having the patient imagine a hierarchy of fears while practicing relaxation techniques.