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

question 34

Multiple Choice

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

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

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