In the Two-Period Model,the Budget Constraint Is Kinked for All

question 4

Multiple Choice

In the two-period model,the budget constraint is kinked for all of these reasons,except

• A) the real interest rate is greater than zero.
• B) there are costs to banks from lending and borrowing.
• C) there is asymmetric information in the credit market.
• D) there is limited commitment in the credit market.

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