In the context of the Irving Fisher two-period model, if a person is a saver (i.e., C1 < Y1), a fall in the real interest rate causes: (a) C1 to rise; C2 to fall (b) C1 ambiguous; C2 to fall (c) C1 to fall; C2 ambiguous (d) C1 to fall; C2 to rise

In the context of the Irving Fisher two-period model, if a person is a saver (i.e., C1 < Y1), a fall in the real interest rate causes: (a) C1 to rise; C2 to fall (b) C1 ambiguous; C2 to fall (c) C1 to fall; C2 ambiguous (d) C1 to fall; C2 to rise

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter9: An Introduction To Basic Macroeconomic Markets

Section: Chapter Questions

Problem 9CQ

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Question

In the context of the Irving Fisher two-period model, if a person is a saver (i.e., C1 < Y1), a fall in
the real interest rate causes:

(a) C1 to rise; C2 to fall
(b) C1 ambiguous; C2 to fall
(c) C1 to fall; C2 ambiguous
(d) C1 to fall; C2 to rise

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