Which of the Following Is True About the Interest Rate

question 78

Multiple Choice

Which of the following is true about the interest rate and saving?

• A)For a saver,the income and substitution effects of an increase in interest rate work in the same directions.
• B)For a borrower,the income and substitution effects of an increase in interest rate work in the same directions.
• C)For a saver,the income effect of an increase in the interest rate is negative,but the substitution effect is positive.
• D)For a borrower,the income and substitution effects of an increase in interest rate work in the opposite directions.

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