Explain why your answer is correct based on slutsky

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Q. Decide whether each of following statements is true or false. Then explain why your answer is correct, based on Slutsky decomposition into income and substitution effect.

a) "If both current & future consumption are normal goods, an increase in interest rate will necessarily make a saver save more."

b) "If both current & future consumption are normal goods, an increase in interest rate will necessarily make a saver choose more consumption in second period."

Reference no: EM1372456

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