Question: An employer offers his or her employee the option of

An employer offers his or her employee the option of shifting x units of income from next year to this year. That is, the option is to reduce income next year by x units and increase income this year by x units.
(a) Would the employee take this option (use a diagram)?
(b) Determine, using a diagram, how this shift in income will affect consumption this year and next year and saving this year. Explain your results.


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  • CreatedDecember 05, 2014
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