Budget constraint and indifference curves

Assignment Help Business Economics

Reference no: EM131391991

Suppose you take a job that pays €30 000 , and set some of this income aside in savings account that pays an annual interest rate of 5 per cent. Use a diagram with a budget constraint and indifference curves to show how your consumption changes in each of the following situations. To keep things simple, assume that you pay no taxes on your income.

a. Your salary increases to €40 000.

b. The interest rate on your bank account rises to 8 per cent.

Reference no: EM131391991

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