When the price of a product falls, the income effect induces the consumer to purchase more of it while the substitution effect prompts her to buy less.

If the supply of loanable funds decreases,

a. more loanable funds will be made available in the loanable funds market b. the rate of interest will increase c. the rate of interest will decrease d. the demand for loanable funds will increase e. the supply curve will shift to the right

A current worker may save more towards retirement so that he or she will have more to leave his or her children later. This altruistic motive is known as the

A. altruism effect. B. bequest effect. C. income effect. D. savings effect.