5. (22) In a two-year setting Engels has an endowment (E) of $10 income this year (I) and $28 next year (I.). He can borrow or lend at an interest rate of 40%. He is currently borrowing $10. a. (7) Graph his budget line with endowment and endpoints (with formula) labeled and year 2 on the x-axis, Mark his choice on the graph, deriving how much he is consuming each year. 10+ 28/(14 05) I, Y2 b. (3) What is the slope of the budget line? What is the interpretation of the slope? The interest rate decreases to 10% c. (3) Graph carefully what occurs to his budget line (you do not need to calculate endpoints). d. (9) Graph and explain using Substitution (that phrase!) and Income effects, what happens to his borrowing (must it decrease or increase?). Is consumption a normal or inferior good