If Suzette Responds to an Increase in the Interest Rate

Multiple Choice

If Suzette responds to an increase in the interest rate by decreasing her saving, then, for Suzette,

A) the increase in the interest rate creates an income effect that is greater than the substitution effect.
B) the increase in the interest rate creates a substitution effect that is greater than the income effect.
C) consumption when young and consumption when old are perfect substitutes.
D) consumption when young and consumption when old are perfect complements.