Assume That Krystal Has Positive Wealth

Multiple Choice

Assume that Krystal has positive wealth. As the interest rate increased, Krystal increased her current consumption. For Krystal

A) the substitution effect of an interest rate increase outweighs the income effect.
B) the income effect of an interest rate increase outweighs the substitution effect.
C) the substitution effect of an interest rate increase must be zero.
D) the income effect of an interest rate increase must equal the substitution effect.