Decide Whether Each of the Following Statements Is True or False

question 72

Essay

Decide whether each of the following statements is true or false. Explain your answer using the income and substitution effects.
i)"If both current and future consumption are normal goods, an increase in the interest rate will necessarily make a saver choose more consumption in the second period."
ii)"If both current and future consumption are normal goods, an increase in the interest rate will necessarily make a saver save more."

---

Definitions:

Perpetual LIFO

A method of inventory valuation that continuously updates the inventory balance using the Last In, First Out (LIFO) principle.

Ending Inventory

The total value of all unsold goods that a company has in its possession at the end of a financial period.

Inventory System

A mechanism for tracking the quantity, value, and movement of inventory through a business operation.

Periodic LIFO

An inventory valuation method applied at the end of an accounting period that assumes the last items added to inventory are the first sold.