Decide whether each of the following statements is true or false. Then explain why your answer is correct, based on the Slutsky decomposition into income and substitution effect.

a) “If both current & future consumption are normal goods, an increase in the interest rate will necessarily make a saver save more.”

b) “If both current & future consumption are normal goods, an increase in the interest rate will necessarily make a saver choose more consumption in the second period.”

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