How the shift in income will affect current consumption

Reference no: EM13224215

an employer offers his or her employee the option of shifting x units of income from next yesr to this year. that is, the option to reduce income next year by x units and increase income this year by x units.

1. calculate the lifetime wealth of the consumer when the employee accepts the offer and when he or she does not.

2. determine, using a diagram, how this shift in income will affect current consumption, future consumption and savings. distinguish between borrowers and lenders.

Reference no: EM13224215

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