In Irving Fisher's Two-Period Model, If the Consumer Is Initially

question 44

Multiple Choice

In Irving Fisher's two-period model, if the consumer is initially a saver and the interest rate and first-period consumption increase, then we can conclude that the income effect:

• A) was greater than the substitution effect.
• B) was less than the substitution effect.
• C) exactly offset the substitution effect.
• D) and the substitution both increased consumption.

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