A consumer is a lender if
A)the consumer's indifference curves are relatively flat.
B)optimum current consumption is greater than current disposable income.
C)current disposable income is greater than future disposable income.
D)optimum current consumption is less than current disposable income.
E)the consumer's indifference curves are negatively sloped.

Question

Quizplus · Accepted Answer

A consumer is considered a lender if their optimal level of current consumption is less than their current disposable income. This is because they have excess income that can be saved or invested, which can be lent out to others. Choice A is incorrect because flat indifference curves indicate that a consumer is indifferent between different levels of consumption and does not necessarily indicate lending behavior. Choices B and C are incorrect because they only describe a mismatch between current and future levels of consumption or income and do not necessarily indicate lending behavior. Choice E is also incorrect because negatively sloped indifference curves indicate that a consumer prefers more consumption to less, but again do not necessarily indicate lending behavior.

A Consumer Is a Lender If