MrOBKandle, Has a Utility Function C₁c₂, Where C₁ Is

question 16

Multiple Choice

Mr.O.B.Kandle, has a utility function c₁c₂, where c₁ is his consumption in period 1 and c₂ is his consumption in period 2.He has no income in period 2.If he had an income of $60,000 in period 1 and the interest rate increased from 10 to 17%,

• A)his savings would increase by 7% and his consumption in period 2 would also increase.
• B)his savings would not change but his consumption in period 2 would increase by 2,100.
• C)his consumption in both periods would increase.
• D)his consumption in both periods would decrease.
• E)his consumption in period 1 would decrease by 17% and his consumption in period 2 would also decrease.

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Definitions:

Psychological Egoism

The theory that suggests that all human actions are motivated by self-interest, even in what seem to be acts of altruism.

Altruism

The selfless concern for the well-being of others, often leading to acts of kindness without expectation of reward.

Ethical Egoism

A moral philosophy suggesting that actions are morally right if they benefit the self of the individual performing them.

Abraham Lincoln

The 16th President of the United States, known for leading the country during the Civil War and abolishing slavery.