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Q4. (3 points) Assume that the residents of a nation become more patient (experience a reduction in their time preferences). a. What will happen to
Q4. (3 points) Assume that the residents of a nation become more patient (experience a reduction in their time preferences).
a. What will happen to the interest rate in that nation?
A. Increase
B. Decrease
C. Stay the same
b. What will happen to the equilibrium level of investment in that nation? Increase, decrease, or stay the same?
A. Increase
B. Decrease
C. Stay the same
c. In the long run, how will the lower time preferences affect the levels of capital and income growth in that nation? C
A. Capital and income will both increase
B. Capital will decrease but income will increase
C. Capital and income will both decrease
