7. (Appendix 4.A) Consumers typically pay a higher real interest rate to borrow than they receive when they lend (by making bank deposits, for example). Draw a consumer’s budget line under the assumption that the real interest rate earned on funds lent, rl , is lower than the real interest rate paid to borrow, rb. Show how the budget line is affected by an increase in rl , an increase in rb, or an increase in the consumer’s initial wealth. Show that changes in rl and rb may leave current and future consumption unchanged. (Hint: Draw the consumer’s indifference curves so that the consumer initially chooses the no-borrowing, no-lending point.)