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

question 38

Multiple Choice

In Irving Fisher's two-period model, the substitution 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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Definitions:

Work Pattern

The regular manner in which work is organized, scheduled, and performed within an organization or job.

Job

A regular activity performed in exchange for payment, typically as part of one's occupation or profession.

Job Enlargement

A method of job design that increases the number of activities in a job to overcome the boredom of overspecialized work.

Integration

The act of combining or coordinating separate elements so they work together effectively.