A Lender with No Investment Opportunities Has Equal Income in Period

question 33

Multiple Choice

A lender with no investment opportunities has equal income in period 0 and in period 1. Which of the following correctly describes the consequence of an increase in the interest rate?

• A) Consumption in period 0 stays the same while consumption in period 1 decreases.
• B) Consumption in period 0 stays the same while consumption in period 1 increases.
• C) Consumption in period 0 increases while consumption in period 1 decreases.
• D) Consumption in period 0 increases while consumption in period 1 increases.

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Definitions:

Metabolism

The set of life-sustaining chemical reactions in organisms that enables them to convert food into energy, maintain their structures, and respond to their environments.

Substitution Of Function

A principle where a new means is adopted to achieve the same goal when the usual method is unavailable.

Language Abilities

The capacity to understand, produce, and use complex systems of communication, particularly the human ability to do so.

Right Hemisphere

The half of the brain that controls the left side of the body, specialized in spatial abilities, face recognition, and processing music and art.