Consider the following picture: y'-t' y-t If the interest rate on borrowing (r2) increases, what happens to consumption today? O it increases O It decreases O It's unchanged O Not enough information to answer

Consider the following picture: y'-t' y-t If the interest rate on borrowing (r2) increases, what happens to consumption today? O it increases O It decreases O It's unchanged O Not enough information to answer

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter23: The Aggregate Expenditure Model

Section: Chapter Questions

Problem 1P

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Consider the following picture:
c'
y'-t'
y-t
If the interest rate on borrowing (r2) increases, what happens to consumption today?
O it increases
It decreases
O It's unchanged
O Not enough information to answer

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