Figure assumed that the implicit rate of return from social


Question: Figure assumed that the implicit rate of return from Social Security was the same as the private rate of return available to Bingley from private savings. Assume now that Social Security has a lower implicit rate of return than the private return. How would the introduction of this Social Security system affect the budget constraint in Figure Hi? What do you expect to happen to the amount Bingley saves?

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Finance Basics: Figure assumed that the implicit rate of return from social
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