Figure 21-16
The following figure illustrates the preferences of a representative consumer, Nathaniel.
-Refer to Figure 21-16. A change in Nathaniel's optimum from point A to point B results from
A)a change in Nathaniel's preferences.
B)an increase in the income Nathaniel receives when he is young.
C)an increase in the interest rate.
D)a decrease in the interest rate.

Question

Figure 21-16
The following figure illustrates the preferences of a representative consumer, Nathaniel. 
-Refer to Figure 21-16. A change in Nathaniel's optimum from point A to point B results from
A)a change in Nathaniel's preferences. 
B)an increase in the income Nathaniel receives when he is young. 
C)an increase in the interest rate. 
D)a decrease in the interest rate.

Quizplus · Accepted Answer

An increase in the interest rate would make saving more attractive, shifting Nathaniel's optimum from point A to point B, where he consumes less when young and more when old.

Figure 21-16 The Following Figure Illustrates the Preferences of a Representative Consumer