Question: Explain, using a two-period indifference curve framework (with income arising in both periods, namely, present and future), how an individual may respond to a decrease
Explain, using a two-period indifference curve framework (with income arising in both periods, namely, present and future), how an individual may respond to a decrease in the interest rate by decreasing or increasing savings. Please include appropriate references to the substitution effect, the income effect, present consumption, future consumption and savings in your answer.
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