Consider the two-period optimization problem when income in


Consider the two-period optimization problem when income in the second period is zero and the individual is a borrower. Suppose that interest rate declines. In a graph, identify the Hicks income and substitution effects of the interest rate change on saving. Assuming that consumption in both periods is a normal good, is the sign of the net effect on saving theoretically unambiguous?

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Business Economics: Consider the two-period optimization problem when income in
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