If the Collateral Constraint Does Not Bind,then in Response to a Decrease

question 16

Multiple Choice

If the collateral constraint does not bind,then in response to a decrease in the price,p,of the asset

• A) the consumer increases both current and future consumption.
• B) the consumer decreases current consumption and future consumption is unchanged.
• C) the consumer leaves current consumption unchanged and increases future consumption.
• D) the consumer increases current consumption and decreases future consumption.
• E) the consumer decreases both current and future consumption.

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