12. Savings decisions Larry is a professor who teaches physics at a university where he is paid a yearly salary of $160,000. He plans to take the next year off to write a book, so he won't earn any money next year. He is currently trying to figure out how much of this year's salary he should save for next year. Disregard any tax considerations, and disregard what happens after next year. In other words, assume that next year, Larry will consume whatever he saves, plus any interest, and that he's not thinking beyond next year. The following graph shows Larry's preferences for consumption this year and next year. Suppose initially Larry cannot earn interest on the money he saves. Use the green line (triangle symbol) to plot Larry's budget constraint (BC1) on the following graph. Then use the black point (plus symbol) to show his optimum consumption bundle. Note: Dashed drop lines will automatically extend to both axes 240 220 200 2 180 BCI (0% Interest)