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10. The Lucas Critique states that economic agents respond to changes in their economic environment, and economic models should be flexible enough to allow for

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10. The Lucas Critique states that economic agents respond to changes in their economic environment, and economic models should be flexible enough to allow for such optimal responses. Dena's bank offered her a higher interest rate on her already sizeable savings. However, Dena's current consumption remained at the same level after the offer as before. Does Dena's behavior contradict the Lucas Critique? Explain. (Hint: consider the income and/ or substitution effects of the shock.)

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