In Irving Fisher's Two-Period Model, If the Consumer Is Initially

question 118

Multiple Choice

In Irving Fisher's two-period model, if the consumer is initially saving in period one and the real interest rate rises, then first-period consumption will:

• A) certainly fall.
• B) certainly rise.
• C) remain constant.
• D) either rise or fall.

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Definitions:

Marginal Revenue

The additional revenue generated from selling one more unit of a good or service.

Externalities

Economic side effects or consequences that affect uninvolved third parties; can be either positive or negative.

Externality

Actions of one party impose costs or benefits on a second party.

Economy of Scale

The cost advantages that enterprises obtain due to their scale of operation, typically resulting in decreased per-unit cost as production increases.