Calvin is planning ahead for retirement and must decide how much to spend and how much to save while he's working in order to have money to spend when he retires. When the substitution effect dominates the income effect, an increase in the interest rate on savings will cause him to
a. increase his savings rate.
b. decrease his savings rate.
c. continue saving at the same rate.
d. Any of the above are possible.
a
You might also like to view...
Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as 
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting upward C. Short-run aggregate supply shifting downward D. Aggregate demand shifting leftward
One of the main tools used by economists to measure the actual distribution of income is the:
a. Lorenz curve. b. Golden Rule. c. MR = MC rule. d. MRP = MRC rule.
Refer to the information provided in Figure 2.5 below to answer the question(s) that follow.
Figure 2.5Refer to Figure 2.5. For this economy to move from Point B to Point C so that an additional 20 OLED televisions could be produced, production of LCD televisions would have to be reduced by
A. more than 30. B. exactly 60. C. fewer than 30. D. exactly 30.
Refer to the short-run information provided in Figure 8.5 below to answer the question(s) that follow. 
Figure 8.5 Refer to Figure 8.5. If six drones are produced, average fixed costs are
A. $2.50. B. $8.33. C. $13.33. D. $21.67.