Question 11(2 points] If there are fewer bad borrowers In the population when there is asymmetric Information 0 a) good borrowers are worse off. 0 b} the Interest rate spread increases. 0 c} the value of collateral Increases. 0 d) the Interest rate spread declines. 0 e] None of the answers are correct Question 12 (2 points] If the value of collateral falls for a consumer, O a) current consumption falls only if the collateral constraint does not bind. O b} current consumptIcn falls only if the collateral constraint bInds. O :1 future consumption must fall. 0 d) None of the answers are correct 0 e] current consumption must rise. Question 13 (2 points] When there are credit-market imperfections an increase in government debt may be advantageous because it 0 a) discourages credit-constrained consumers from borrowing too much 0 b} None of the answers are correct 0 c} encourages more private saying. 0 cl) allows credit-constrained consumers to borrow more. 0 e] eliminates the problems that cause credit-market Imperfections. Question 14 (2 points] If consumers use their house as collateral for lending and the value of housing in general fails, then 0 a) lenders prefer to become borrowers. O b} lending is unchanged and future consumption increases. 0 c} lending and aggregate consumption decrease. 0 d) borrowing increases furtherto maintain current consumptIon. 0 e] None of the answers are correct Question 15 (2 points] For a consumer not bound by the collateral constraInt. a reduction in the price of the collateral leads to O a) a decrease in current and future consumption. 0 b} a decrease in current consumption and no change in future consumption. 0 :1 None of the answers are correct 0 d) no change in current consumption and a decrease in future consumption. 0 e] an increase in current consumption and a decrease in future consumptIon. Question 16 (2 points) Why do consumers benefit from pay-as-you-go social security? ( a) With sufficiently low population growth, the young can perpetually contribute more. b) It is a better way than taxes to finance the government. c) None of the answers are correct O d) It forces people to save more than they would otherwise. e) With sufficiently high population growth, many young contribute to the benefits of the old. Question 17 (2 points) A fully funded social security program O a) None of the answers are correct O b) solves the Ricardian equivalence problem. O c) works when the population growth rate exceeds the real interest rate. O d) is forced savings, but can work if the government cannot commit to bailing out destitute retirees. ( e) redistributes income between generations. Question 18 (2 points) Buying an item with cash would be an example of money's role as a ( a) store of wealth. b) store of value. c) standard of deferred payment. O d) None of the answers are correct O e) unit of account. Question 19 (2 points) The most narrowly defined monetary aggregate is ( a) M2. O b) M2+ +. O c ) Mit. O d) currency outside banks. ( e) None of the answers are correct Question 20 (2 points) The Fisher effect is a) the effect of the money supply on the price level. b) None of the answers are correct ( c) the effect of government spending on output. O d) the effect of inflation on the nominal interest rate. O e) the effect of inflation on the real interest rate
