If Suzette Responds to an Increase in the Interest Rate

question 538

Multiple Choice

If Suzette responds to an increase in the interest rate by decreasing her saving, then, for Suzette,

• A)the increase in the interest rate creates an income effect that is greater than the substitution effect.
• B)the increase in the interest rate creates a substitution effect that is greater than the income effect.
• C)consumption when young and consumption when old are perfect substitutes.
• D)consumption when young and consumption when old are perfect complements.

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Definitions:

Cotransport

The active transport of a substance from a region of low concentration to a region of high concentration by coupling its transport to the transport of a substance down its concentration gradient.

Concentration Gradient

A gradual change in the concentration of solutes in a solution as a function of distance through a solution.

ATP

Adenosine Triphosphate, a molecule that stores and transfers energy within cells, crucial for many cellular processes.

Facilitated Diffusion

The passive transport of ions or molecules by a specific carrier protein in a membrane. As in simple diffusion, net transport is down a concentration gradient, and no additional energy has to be supplied. Compare with diffusion and active transport.