In the two-period model, suppose a household's income in the first period is $30,000, income in the second period is $40,000, and the real interest rate is 20 percent.Draw a diagram showing the budget constraint.Now, suppose the real interest rate rises to 25 percent.Draw the new budget constraint.For the budget constraints you have drawn, be sure to show the values of the intercepts on each axis.Show your work.

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The Answer of In the two-period model, suppose a household's income in the first period is $30,000, income in the second period is $40,000, and the real interest rate is 20 percent.Draw a diagram showing the budget constraint.Now, suppose the real interest rate rises to 25 percent.Draw the new budget constraint.For the budget constraints you have drawn, be sure to show the values of the intercepts on each axis.Show your work.

In the Two-Period Model, Suppose a Household's Income in the First