Suppose an Individual Has a Fixed Amount of Wealth to Allocate

question 6

Multiple Choice

Suppose an individual has a fixed amount of wealth to allocate between consumption in two periods (c₁ and c₂) .Any funds not spent in period 1 will earn interest (at the rate r) which will increase purchasing power in period 2.
Consider four possible reactions to an increase in r:
I.c₁ increases.
II.c₁ decreases.
III.c₂ increases.
IV.c₂ decreases.
Which of these is consistent with the hypothesis that both c₁ and c₂ are normal goods?

• A)I,II,III,and IV.
• B)I,II,and IV,but not III.
• C)I,III,and IV,but not II.
• D)II and III,but not I and IV.
• E)I,II and III,but not IV.

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Definitions:

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The official power to make legal decisions and judgments, often determined by geographic area or type of case.

Venue

The location where a trial or legal proceeding is held or deemed most appropriate for resolving a case.

State and Federal Jurisdiction

The legal authority granted to state and federal courts over certain types of cases based on geographical area and subject matter.

Subject-matter Jurisdiction

The capability of a court to handle particular types of legal cases or those pertaining to specific areas of interest.