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MMMU-Pro / test_Economics_93 / <image 1> Crusoe begins with an endowment A. Point R is the consumption…
Problem
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question
<image 1> Crusoe begins with an endowment A. Point R is the consumption combination he would choose at real interest rate r and point R' is the consumption combination he would choose at real interest rate r'. Which of the following statements is true?
img type
- Plots and Charts
options
- Crusoe is a lender today.
- Crusoe's choice of consumption combination is independent of the real interest rate.
- Crusoe's wealth has decreased because of the change in the real interest rate.
- The marginal rate of intertemporal substitution at R is equal to r'.
- The change in interest rate does not decrease Crusoe's utility since he is free to keep his original endowment A if he so chooses.
- The marginal rate of intertemporal substitution at R is equal to r.
- Crusoe's wealth has increased because of the change in the real interest rate.
- The change in interest rate increases Crusoe's utility since he can choose to keep his original endowment A.
- The real interest rate is directly proportional to Crusoe's utility.
- Crusoe is a borrower today.
subject
Economics

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