Not All Households Are Net Borrowers

Multiple Choice

Not all households are net borrowers. For households that are net lenders, an increase in interest rates will:

A) decrease current consumption if the income effect is greater than the substitution effect.
B) decrease saving if the substitution effect is greater than the income effect.
C) increase current consumption if the substitution effect is greater than the income effect.
D) increase current consumption if the income effect is greater than the substitution effect.