Business, 09.10.2021 18:30, jeffhuffle17

Sally will earn $61,500 this year and $40,500 next year. she can borrow or lend at this rate. She has no wealth at the start of this year and plans to finish next year having consumed everything she possibly can. She would like to consume the same amount this year as next year. The inflation rate is 0% Now the real interest rate is 40%. d) How would Sally change savings and consumption if the real interest rate was 40%? (Hint: Choose the right option in the parentheses. To answer the question correctly, try to find the numerical solution first. Do not put a space in answers)

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Sally will earn $61,500 this year and $40,500 next year. she can borrow or lend at this rate. She ha...