In a Simple Model of Credit Imperfections, When Consumers Borrow

question 4

Multiple Choice

In a simple model of credit imperfections, when consumers borrow and lend at different interest rates, the budget line is kinked because

• A)taxes exceed income.
• B)income exceeds taxes.
• C)the consumer lends at a higher rate than they borrow.
• D)the consumer lends at a lower rate than they borrow.
• E)the consumer cannot consumer more than disposable income in any period.

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