In Irving Fisher's Two-Period Model, the Income Effect of an Increase

question 83

Multiple Choice

In Irving Fisher's two-period model, the income effect of an increase in the interest rate in the first period for a saver is the:

• A) decrease in the relative price of second-period consumption.
• B) additional income earned on first-period saving.
• C) decrease in the relative price of first-period consumption.
• D) additional income earned on second-period saving.

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