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If the Substitution Effect of the Real Interest Rate on Saving

Question 13

Multiple Choice

If the substitution effect of the real interest rate on saving is larger than the income effect of the real interest rate on saving,then a rise in the real interest rate leads to a ________ in consumption and a ________ in saving,for someone who's a lender.


A) fall; fall
B) fall; rise
C) rise; rise
D) rise; fall

Correct Answer:

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