If C₀and C₁are both normal goods, for a person who saves in the initial equilibrium, when i rises: A)C₀and C₁both increase. B)C₁declines. C)C₁increases. D)C₀and C1 both decline.

Question

Quizplus · Accepted Answer

Both goods are normal goods, which means that as income increases, demand for both goods will increase. Therefore, if i (which represents income) rises, C₁will increase.

If C0 and C1 are Both Normal Goods, for a Person

If C₀and C₁are Both Normal Goods, for a Person