If a Consumer Is a Borrower in Period One and the Interest

question 5

Multiple Choice

If a consumer is a borrower in period one and the interest rate rises, the:

• A) income and substitution effects both tend to make consumption higher in the first period.
• B) income and substitution effects both tend to make consumption lower in the first period.
• C) income effect tends to make consumption higher in the first period and the substitution effect tends to make it lower.
• D) substitution effect tends to make consumption higher in the first period and the income effect tends to make it lower.

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Definitions:

Undisclosed Principal

A person whose existence is unknown to the third party in a contract made by an agent on their behalf.

Apparent Authority

The power that a third party perceives an agent has over the principal, based on the principal's behavior.

Actual Authority

Actual authority refers to the express and implied powers that an agent has been intentionally granted by the principal in an agency relationship.

Subagent

A person authorized by an agent to perform tasks or duties on behalf of the agent's principal.