Intertemporal Budget Constraint

question 26

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 does not change.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

---

Definitions:

NATO

The North Atlantic Treaty Organization, a military alliance formed in 1949 comprising North American and European countries for mutual defense and security.

Women's Suffrage

The right of women to vote in elections, achieved through various movements and legislative changes over time.

Japanese History

The extensive and rich history of Japan, from its ancient Jomon culture through its feudal periods to its modern state as a significant global power.

Human Rights

Rights that are believed to belong justifiably to every person, including freedom, justice, and access to basic needs.