Use the Intertemporal Budget Constraint - Equation (2)- to Explain

question 74

Essay

Use the intertemporal budget constraint - equation (2)- to explain how an increase in the real interest rate causes two distinct effects,an income effect and a substitution effect,and how those effects differ depending on whether the consumer is a saver or a borrower.

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Definitions:

Faith

In the popular sense, a belief in something for which you have inadequate evidence or little good reason. In theology, faith usually refers to the trust a believer should have in God’s ultimate grace and fairness. Sometimes, faith is defended as a rational belief in God (for example, in Kant). More often, faith is defended against rationality (as in Kierkegaard).

Good Works

Actions or deeds that reflect moral virtue and contribute positively to the wellbeing of others.

Philosophical Questions

Philosophical Questions are profound inquiries that explore essential aspects of existence, knowledge, values, and reason.

Clear And Convincing

A standard of proof that is greater than a preponderance of the evidence but less than beyond a reasonable doubt, requiring that the evidence presented must be highly and substantially more probable to be true.