Question

A consumer receives income y in the current period, income yœ in the future period, and pays taxes of t and t œ in the current and future periods, respectively. The consumer can borrow and lend at the real interest rate r. This consumer faces a constraint on how much he or she can borrow, much like the credit limit typically placed on a credit card account. That is, the consumer cannot borrow more than x, where x < we - y + t, with we denoting lifetime wealth. Use diagrams to determine the effects on the consumer’s current consumption, future consumption, and savings of a change in x, and explain your results.

Use graphs as well please

I need a different answer than the time i asked before please.

Answer 1

Giveni income can A change a factors other than cause the consumption core to shift. 1. For example: > A fall in interest rates should stimulate demand at each level of income and might kad to an upward shift in consumption from al to ca. = A sharp and lower consumption fall in shave Price would consumeer confidence - leading from ci to C3, reduce wealth to a fall in

Draw the Graph coryumo spending 45 Degree line ca at un Real Disposable income