If an increase in the interest rate lowers savings

Assignment Help Microeconomics

Reference no: EM13695995

If an increase in the interest rate lowers savings, then

A. the substitution effect is greater than the income effect.

B. the income effect is greater than the substitution effect.

C. the income effect and the substitution effect move in the same direction.

D. we are unable to determine the sizes of the income and substitution effects without more information.

Reference no: EM13695995

Questions Cloud

Game show uncertainty : In the final round of a TV game show, contestants have a chance to increase their current winnings of 1 million dollars to 10 million dollars. If they are wrong, their prize is decreased to $100,000. To win, they have to guess the exact percentage th..

Both fall into deep economic recessions : Europe and Aisa both fall into deep economic recessions. What impact will this have on the U.S. aggregate demand?

Change in consumer confidence on the economy : What is the likely effect of the change in consumer confidence on the economy? Explain this using the multiplier concept of fiscal policy (Macroeconomics)

Make future supply adjustments to fix oil prices : The secretary general of OPEC, Ali Rodriquez, stated that it would be easier for OPEC nations to make future supply adjustments to fix oil prices that are too high, than it would be to rescue prices that are too low. Evaluate this statement.

If an increase in the interest rate lowers savings : If an increase in the interest rate lowers savings, then

Monopolistically competitive firm : You are the manager of a monopolistically competitive firm. The inverse demand curve you face is P = 50 – 4Q. Your cost function is C(Q) = 10 + 2Q. What level of output should you produce to maximize profits? What is your profit and what will happen ..

What are the two general theorems of welfare economics : What are the Two General Theorems of Welfare Economics? What implications do they have for the “welfare state”? What are the ‘first best’ assumptions necessary for these theorems to hold? How realistic are these assumptions?

What are the commonly used arguments for the use of tariffs : The U. S. has committed itself to creating a free trade zone between the U.S., Canada and Mexico. Why might this be important? Relative to imports and exports to other nations, what is the size of these two North American trading partners trade relat..

Two alternatives in a replacement analysis : Typically, there are two alternatives in a replacement analysis. One alternative is to replace the defender now. The other alternative is which of the following?

User Account

All Pages