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.
Correct Answer:
Verified
Q6: A collateral constraint captures the idea that
A)the
Q7: Limited commitment means
A)only governments can borrow.
B)there is
Q8: In a pay-as-you-go social security system, everyone
Q9: For a consumer not bound by the
Q10: The commitment problem that may make a
Q12: In the example with credit market imperfections
Q13: The default premium increases when there is
Q14: Social security is most likely to present
Q15: Moral hazard represents a problem for fully-funded
Q16: When consumers lend at a lower rate
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