If the substitution effect is stronger than the income effect,a decrease in real interest rates will ________ current consumption for households who are lenders and will ________ current consumption for households who are borrowers.
A) increase; decrease
B) decrease; increase
C) increase; increase
D) increase; have an unclear effect on
Correct Answer:
Verified
Q34: Hector's wealth is zero,he expects to work
Q35: The substitution effect indicates that higher real
Q36: Hector's wealth is zero,he expects to work
Q37: Hector's wealth is zero,he expects to work
Q38: Hector's wealth is zero,he expects to work
Q40: The income and substitution effects move in
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents