For a Consumer Not Bound by the Collateral Constraint, a Reduction

question 30

Multiple Choice

For a consumer not bound by the collateral constraint, a reduction in the price of the collateral leads to

• A) nothing.
• B) an increase in current consumption and a decrease in future consumption.
• C) a decrease in current consumption and no change in future consumption.
• D) a decrease in current and future consumption.
• E) no change in current consumption and a decrease in future consumption.

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