Multiple Choice
Suppose consumption in year 2 (C2) is on the horizontal axis and consumption in year 1 (C1) is on the vertical axis.An increase in the interest rate:
A) makes borrowers better off and lenders worse off.
B) causes more people to shift their consumption from year 2 to year 1.
C) causes the budget line to rotate outward along the horizontal axis.
D) will reduce savings in year 2.
Correct Answer:
Verified
Correct Answer:
Verified
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