Intertemporal Budget Constraint

question 3

Multiple Choice

Intertemporal Budget Constraint
-Given the table above,suppose consumption in period two is $40,000.Then,the interest rate rises to five percent,and period-two consumption rises to $41,050.We may infer that ________.

• A)the income effect is stronger than the substitution effect
• B)the substitution effect is stronger than the income effect
• C)the substitution and income effects cancel out
• D)this consumer has a binding borrowing constraint

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Definitions:

Gastrointestinal System

The digestive tract and its accessory organs, responsible for the digestion and absorption of nutrients and the expulsion of waste.

Pelvic Inflammatory Disease

An infection of the female reproductive organs, often caused by sexually transmitted bacteria, leading to symptoms such as pelvic pain.

Frequency

The number of occurrences of a repeating event per unit of time, often used in physics, electronics, and statistics.

Acne

A skin condition characterized by the presence of pimples, blackheads, and cysts, mainly due to oil gland overactivity and pore blockage.