If the Value of Collateral Falls for a Consumer

question 30

Multiple Choice

If the value of collateral falls for a consumer

• A)current consumption falls only if the collateral constraint does not bind.
• B)current consumption must rise.
• C)current consumption must fall.
• D)future consumption must fall.
• E)current consumption falls only if the collateral constraint binds.

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Definitions:

Goods and Services

These are the products and activities that are available for purchase by consumers, including tangible items and intangible services.

Labor Supply

The total hours of work that workers are willing and able to provide at a given wage rate in a certain period.

Unit Elastic

Describes a supply or demand curve where a given percentage change in price causes an equal percentage change in the quantity demanded or supplied.

Elasticity of Labor Supply

A measure of how the quantity of labor supplied changes in response to changes in wages or salaries.