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Sketch consumers budget line under assumption that real

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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 this consumer's budget line is affected by an increase in the initial wealth.

Reference no: EM13389591

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