If an Increase in the Interest Rate Raises Savings, Then

question 390

Multiple Choice

If an increase in the interest rate raises savings, then

• A)the substitution effect is greater than the income effect.
• B)the income effect is greater than the substitution effect.
• C)the income effect and the substitution effect move in the same direction.
• D)we are unable to determine the sizes of the income and substitution effects without more information.

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Definitions:

Digestive Juice

Fluids produced by the digestive system that help break down food into absorbable nutrients.

Gallbladder

A small organ beneath the liver that stores bile, which is released into the intestine to help digest fat.

GERD

Gastroesophageal Reflux Disease, a condition where stomach acid frequently flows back into the esophagus.

Hiatal Hernia

A condition where part of the stomach pushes up through the diaphragm muscle into the chest cavity.