If the Substitution Effect of the Real Interest Rate on Saving

question 76

Multiple Choice

If the substitution effect of the real interest rate on saving is smaller than the income effect of the real interest rate on saving,then a rise in the real interest rate leads to a ________ in consumption and a ________ in saving,for someone who's a lender.

• A)fall; fall
• B)fall; rise
• C)rise; rise
• D)rise; fall

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Definitions:

Current Year

Refers to the present fiscal or calendar year in which a business or organization is operating.

Cost of Goods Manufactured

The complete cost of goods manufactured in a given period, encompassing expenses for materials, labor, and overhead.

Financial Report

A financial report is a formal record of the financial activities and position of a business, person, or other entity over a given period.

Manufacturing Process

A series of steps and operations used in the production of goods.