Multiple Choice
The substitution effect of an increase in the interest rate will result in an increase in
A) consumption when young and increase in savings when young.
B) consumption when old and an increase in savings when young.
C) consumption when young and an increase in savings when old.
D) savings when old and an increase in consumption when old.
Correct Answer:
Verified
Correct Answer:
Verified
Q2: The direction of the substitution effect is
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