The intertemporal substitution effect of a change in the price level results from a
A)change in the purchasing power of wealth.
B)change in the price of foreign goods relative to domestic goods.
C)change in the price of current goods relative to future goods.
D)Both answers B and C are correct.

Question

Quizplus · Accepted Answer

The intertemporal substitution effect refers to how consumers change their consumption patterns over time in response to changes in the relative prices of current versus future goods.

The Intertemporal Substitution Effect of a Change in the Price