When the interest rate rises, the income effect refers to a net saver's (a) inclination to...

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When the interest rate rises, the income effect refers to a net savers (a) inclination to increase consumption in the presen

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Answer 1

Answer #1

Option C

Explanation: Income effect refers to the rise in income due to an increase in interest rate. When interest rate rises, interest income also rises. Because of this a person might save little less just to earn the same interest as before but consume more at present.

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Answer 2

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