In the two-period model, a higher real interest rate
A)increases the present value of income.
B)causes the budget constraint to rotate in a counterclockwise direction.
C)makes households that had initially planned to save better off.
D)makes households that had initially planned to borrow better off.

Question

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The Answer of In the two-period model, a higher real interest rate
A)increases the present value of income.
B)causes the budget constraint to rotate in a counterclockwise direction.
C)makes households that had initially planned to save better off.
D)makes households that had initially planned to borrow better off.

In the Two-Period Model, a Higher Real Interest Rate