In a Simple Model of Credit Imperfections, When Consumers Borrow

Multiple Choice

In a simple model of credit imperfections, when consumers borrow and lend at different interest rates, the budget line is kinked because

A) the consumer cannot consumer more than disposable income in any period.
B) taxes exceed income.
C) the consumer lends at a higher rate than they borrow.
D) the consumer lends at a lower rate than they borrow.
E) income exceeds taxes.