- (a) Formulate the consumer problem and solve for the optimal decisions: c, c′ and s. Show your work.
- (b) Looking at the case of a net borrower, what do we have to assume about the substitution and income effects to generate the result that a decrease in r brings about an increase in current-period consumption? Explain your answer.
- (c) Use graphs and finish with concluding sentence to answer the following questions:
Place New Order
It's Free, Fast & Safe
"Looking for a Similar Assignment? Order now and Get a Discount!