When tastes over current and future consumption are homothetic, the interest rate elasticity of savings supply is positive.
Answer the following statement true (T) or false (F)
False
Rationale: Homothetic tastes over current and future consumption are consistent with an increase in the interest rate causing an increase in savings (when consumption is relatively substitutable over time) as well as a decrease in savings (when consumption is relatively complementary across time). Thus, the interest rate elasticity of savings supply can be positive or negative.
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