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Suppose Joe earns $1,000 in Year 1 and $0 in Year 2. Any amount he saves will earn interest at a rate of 10%. Draw
Suppose Joe earns $1,000 in Year 1 and $0 in Year 2. Any amount he saves will earn interest at a rate of 10%. Draw loe's budget line. (Hint: He can either consume all $1000 this year or consume nothing this year and have $1,100 next vear.) Assuming convex indifference curves, show that an increase in the rate of interest can cause joe's
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