Multiple Choice
An increase in the real interest rate is an example of a
A) pure substitution effect.
B) substitution effect and a positive income effect.
C) substitution effect and a negative income effect.
D) substitution effect and an income effect whose sign depends on whether the consumer is initially a borrower or a lender.
E) positive substitution effect and a negative income effect.
Correct Answer:
Verified
Correct Answer:
Verified
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