What will happen to jill consumption in first period

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Q. Jack earns $100 in first period and $100 in second period. Jill earns nothing in first period and $210 in second period. Both of m can borrow or lend at interest rate r. a. You observe both Jack and Jill consuming $100 in first period and $100 in second period. What is interest rate? B. Suppose interest rate increases. What will happen to Jack's consumption in first period? Is Jack better off or worse off than before interest rate rise? C. What will happen to Jill's consumption in first period when interest rate increases? Is Jill better off or worse off than before interest rate increase?

Reference no: EM1369404

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