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1. For Antonio, the income effect of an interest-rate increase is stronger than the substitution effect. In response to a higher interest rate, will Antonio
1. For Antonio, the income effect of an interest-rate increase is stronger than the substitution effect. In response to a higher interest rate, will Antonio save more or will he save less? 2. For normal goods, the income effect and the substitution effect work in the same direction; so when the price of a good falls, both the income effect and substitution effects lead to a higher quantity demanded. How would this change if the good is an inferior good?
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