Questions
Multiple choice
Consider the situation represented in the above figure. Which of the following statements are correct? (Select all that apply)
Options
A.The consumer is a lender.
B.The current disposable income is greater than current consumption.
C.The current disposable income is greater than the future disposable income.
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Step-by-Step Analysis
The problem presents an intertemporal budget scenario depicted by the blue budget line with intercepts at (0, m(1+r)) on the c2 axis and (m, 0) on the c1 axis, where m is current income and r is the interest rate.
Option 1: The consumer is a lender. This is true if the consumer saves rather than consumes all of his current income. In the graph, the chose......Login to view full explanationLog in for full answers
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