1. In a competitive equilibrium the real interest rate r is: (a) exogenous. (b) endogenous and must clear the credit market only if consumers are lending and the government is borrowing. (c) endogenous and must clear the goods market. (d) endogenous and must equate consumer consumption with government expenditures. 2. According to the two-period model of the niacroeconomy: (a) a. salary increase and a lottery win, will both increase current consumption. (b) a salary increase will raise current consumption, but a lottery win will not. (c) a salary increase and a lottery win, will both increase current consumption, but only for lenders. (d) a salary increase and a lottery win, will be fully saved by lenders. 3. According to Ricardian Equivalence the real interest rate does not change because: (a) consumers' increase in current consumption is offset by consumers' decrease in future consumption. (13) consumers' increase in current consumption is offset by the government's drop in current expenditures. ((3) consumers' decrease in future consumption is offset by government's increase in cur- rent savings. (d) consumers' increase in current savings is offset by the government's decrease in current savings. 4. According to the Permanent Income Hypothesis, a pcwseaeat drop in taxes will: (a) increase future consumption, reduce current consumption, and may increase savings. (b) have no effect on current and future consumption but will increase savings. (c) increase both current and future consumption, and an ambiguous effect on savings. ([1) reduce both current and future consumption, and may increase savings