In Irving Fisher's Two-Period Model, If the Consumer Is Initially

Multiple Choice

In Irving Fisher's two-period model, if the consumer is initially a saver and the interest rate increases, and first-period consumption decreases, then we can conclude that the income effect:

A) was greater than the substitution
B) effect. was less than the substitution effect.
C) exactly offset the substitution effect.
D) and the substitution effect both decreased consumption.