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In: Economics

Nadia earns $2000 this month and will earn $2500 the next month. The interest rate between...

  1. Nadia earns $2000 this month and will earn $2500 the next month. The interest rate between each month is 10%. She wants to consume the same quantity each month.

(each question is separate and do not build on each other)

  1. How much would Nadia save? How much would she consume?
  2. If the interest rate is now 20%, how much would she save? How much would she consume?
  3. If she asks her boss to switch her paycheck (she earns $2500 the first month and $2000 the second), how much would she save? How much would she consume?
  4. If she asks her parent for a little extra in the second month, raising her income to $3000, how much would she save? How much would she consume?
  5. If she knows she will be fired at the end of the first month and receive not benefit, how much would she save? How much would she consume?

Solutions

Expert Solution

Rahul Sunny answered 2 years ago
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