When the Consumer Has Chosen His or Her Optimal Values

question 10

Multiple Choice

When the consumer has chosen his or her optimal values of first-period and second-period consumption, the marginal rate of substitution equals:

• A) 1 plus the interest rate r.
• B) 1 minus the interest rate r.
• C) 1 divided by the interest rate r.
• D) the interest rate r.

---

Definitions:

American National Exhibition

A showcase event, often referring to ones held during the Cold War era, intended to display American culture, technology, and achievements.

Moscow

The capital city of Russia, known for its historical and cultural significance, as well as being a major political, economic, and scientific center.

Model Suburban Home

An ideal or typical design for a house in suburban America, typically featuring a yard and distinct from urban and rural designs.

Adlai Stevenson

A prominent American politician and diplomat, known for his roles in the United Nations and his two unsuccessful presidential campaigns in the 1950s.