The Assumption That Current-Period Consumption Demand Is Negatively Related to the Real

Multiple Choice

The assumption that current-period consumption demand is negatively related to the real interest rate is justified as long as the

A) substitution effect dominates the income effect.
B) income effect dominates the substitution effect.
C) income effect and substitution effects are equal.
D) representative consumer is a lender.
E) representative consumer is a borrower.