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:

DSM-IV-TR

The Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition, Text Revision; a guide used by clinicians to diagnose mental disorders.

DSM III

The third edition of the Diagnostic and Statistical Manual of Mental Disorders, a standardized classification of mental disorders used by mental health professionals in the U.S.

DSM II

The second edition of the Diagnostic and Statistical Manual of Mental Disorders, a publication for the classification of mental disorders.

DSM-IV-TR

The Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition, Text Revision; a manual published by the American Psychiatric Association that categorizes and defines mental disorders.