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In class, we dicussed that if c and c' are normal goods, then the income effect for these two goods will be positive. Now, consider
In class, we dicussed that if c and c' are normal goods, then the income effect for these two goods will be positive. Now, consider c now is an inferior good, show with 2 separate diagrams, how the optimal c and c' will change if i) there is an increase in lifetime income, and ii) if there is an increase in the interest rate r
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