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options for b-1 increase or decrease options for b-2 better or worse Ben earns...

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Finance

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options for b-1 increase or decrease

options for b-2 better or worse

Ben earns $5,700 this year and zero income the next year. Ben also has an investment opportunity in which he can invest $2,600 and receive $5,000 next year. Suppose Ben consumes $2,000 this year, invests in the project, and consumes $6,177 next year. a. What is the market rate of interest? (Hint: The new market interest rate line EF is parallel to AH.) Market rate % b-1. Suppose the interest rate increases. What will happen to Ben's consumption for this year? If interest rate increases, Ben's consumption b-2. Is Ben better off or worse off than before the interest rate rise

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