Consumption, Substitution effect and income effecet

Jun 1st, 2014
Anonymous
Category:
Business Finance
Price: $5 USD

Question description

1. A decrease in interest rates will cause a borrower to increase their borrowing if,

a) consumption is inferior and the SE dominates the IE

b) consumption is inferior and the IE dominates the SE

c) consumption is normal and the SE dominates the IE

d) consumption is normal and the IE dominates the SE


2.A decrease in interest rates will cause a saver to increase their saving if,

a) consumption is inferior and the SE dominates the IE

b)consumption is inferior and the IE dominates the SE

c) consumption is normal and the SE dominates the IE

d) consumption is normal and the IE dominates the SE


What are their answers and What's the difference between them?


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