If a Consumer Is a Borrower in Period One and the Interest

Multiple Choice

If a consumer is a borrower in period one and the interest rate rises, the:

A) income and substitution effects both tend to make consumption higher in the first period.
B) income and substitution effects both tend to make consumption lower in the first period.
C) income effect tends to make consumption higher in the first period and the substitution effect tends to make it lower.
D) substitution effect tends to make consumption higher in the first period and the income effect tends to make it lower.