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a . Use a diagram to show the income and the substitution effects of an increase in the interest rate for Marco (a farmer) (graph
a. Use a diagram to show the income and the substitution effects of an increase in the interest rate for Marco (a farmer) (graph shown below), who receives his endowment today.
b. Compare these effects with those for Julia (a borrower) (graph shown below) and explain your results.
Marco's graph
Julia's graph
Consumption now (\$) FF(10% interest rate ) Consumption now (\$) FF(10% interest rate )Step by Step Solution
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