Suppose a person's preferences are to "consumption smooth",which means they wish to get $C _ { 1 } = C _ { 2 }$ for all incomes and interest rates $Y _ { 1 } = Y _ { 2 }$ .For any interest rate and ,the person will ____ in the first period.
A)borrow
B)save
C)neither borrow nor save

Question

Quizplus · Accepted Answer

If the person wants to consume the same amount in both periods, they do not need to borrow or save. Therefore, the best choice is neither to borrow nor save (Choice C).

Suppose a Person's Preferences Are to "Consumption Smooth",which Means They C1=C2C _ { 1 } = C _ { 2 }C1​=C2​

Suppose a Person's Preferences Are to "Consumption Smooth",which Means They $C _ { 1 } = C _ { 2 }$