Macroeconomics Three Questions
1. Shoppers usually pay the next actual rate of interest to borrow than they obtain after they lend (by making financial institution deposits, for instance). Draw a customers finances line below the belief that the actual rate of interest earned on funds lent, r L , is decrease than the actual rate of interest paid to borrow, rB . Present how this customers finances line is affected by a rise within the preliminary wealth.2. I) Draw the finances line and the related indifference curve for a shopper who's initially a borrower. Point out the no-borrowing no-lending level (label it as N) and the optimum consumption level (label it as A).II) Present the impact of a rise in the actual rate of interest on the finances line and the customers optimum consumption. Utilizing an intermediate finances line, present the earnings impact and the substitution impact on the present consumption and the longer term consumption. Specify whether or not these results work in the identical path or the other instructions?three. Specify whether or not every assertion is TRUE or FALSE. In case you specify it as a FALSE assertion, then briefly clarify your motive.a) If the longer term earnings will increase, then the present consumption, saving, and the longer term consumption improve.b) The slope of the finances line is dependent upon the actual rate of interest and doesn't rely upon the extent of earnings.c) There's a sure bundle of present consumption and future consumption which lies on the finances line at any charge of curiosity.