During an Economic Expansion Due to an Increase in Technology

question 23

Multiple Choice

During an economic expansion due to an increase in technology, A, consumption will:

• A)tend to rise due to the income effect.
• B)may rise or fall depending on whether the income effect is greater than the substitution effect or not.
• C)tend to fall due to the intertemporal substitution effect of the interest rate rising.
• D)all of the above.

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Definitions:

Account

A record or statement of financial expenditure and receipts relating to a particular period or purpose or the contractual arrangement under which an entity manages the funds of another.

Collection Float

The delay between when a check is deposited into a bank account and when the funds are available to the depositor, affecting cash flow.

Cheques

Cheques are financial instruments that order a bank to pay a specific amount of money from a person’s account to the person in whose name the cheque has been issued.

Deposit

Money placed in a financial institution for safekeeping, which can earn interest and is often used to secure transactions.