Suppose you take a job that pays $30 000 and set some of this income aside in
Question:
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 per cent. 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 per cent.
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Related Book For 
![Principles Of Microeconomics [Australia And New Zealand Edition]](https://dsd5zvtm8ll6.cloudfront.net/si.question.images/book_images/672464107669a_18135.jpg)
Principles Of Microeconomics [Australia And New Zealand Edition]
ISBN: 9781337408066
6th Edition
Authors: Joshua Gans, Stephen King, Martin Byford, N. Gregory Mankiw
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