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If current and future consumption are both normal goods, in increase in the interest rate will...

If current and future consumption are both normal goods, in increase in the interest rate will necessarily
1. cause savers to save more.
2. cause borrowers to borrow less.
3. reduce everyone's current consumption.
4. make everyone worse off.
5. None of the above.
(Please show your answer and describe the reasons)

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Answer #1

Answer of the above asked question is option " 2 " that is causes borrower to borrow less .

Because it makes a saver select more consumption in the next period .

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