1.8. Suppose you take a job that pays $30,000 and set some of this income aside in...
Question:
1.8. Suppose you take a job that pays $30,000 and set some of this income aside in a savings account that pays an annual interest rate of 5 percent. Use a diagram with a budget constraint and indifference curves to show how your consumption changes in each of the following situations. To keep things simple, assume that you pay no taxes on your income.
a. Your salary increases to $40,000.
b. The interest rate on your bank account rises to 8 percent.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Question Posted: