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Business, 15.06.2021 23:50 israel8471

Suppose an individual has a fixed amount of wealth to allocate between consumption in two periods ( C 1 and C 2). Any funds not spent in period 1 will earn interest (at the rate r), which will increase purchasing power in period 2. Consider four possible reactions to an increase in r: I. C1 increases. II. C1 decreases. III. C2 increases. IV. C2 decreases. Which of these is consistent with the hypothesis that both C 1 and C 2 are normal goods

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