If the substitution effect is stronger than the income effect, a decrease in real interest rates will current consumption for households who are lenders and will current consumption for households who are borrowers

A) increase; decrease
B) decrease; increase
C) increase; increase
D) increase; have an unclear effect on

Economics

A major principle of economics is that people respond to incentives

Indicate whether the statement is true or false

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Economics

In the figure above, which of the following represents a money flow?

A) Goods purchased B) Interest C) Capital D) Services sold E) Goods supplied

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Economics

If the substitution effect is stronger than the income effect, a decrease in real interest rates will ________ current consumption for households who are lenders and will ________ current consumption for households who are borrowers