1. Mia receives $100 of income this period and $100 next period. At an interest rate of 10 percent, he consumes all her current income in each period. He has a diminishing marginal rate of time...

Extracted text: 1. Mia receives $100 of income this period and $100 next period. At an interest rate of 10 percent, he consumes all her current income in each period. He has a diminishing marginal rate of time preference between consumption next period and consumption this period. The interest rate rises to 20 percent. • Draw Mia's budget constraint, indifference curve, and label optimal bundle before and after the change in interest rate. o Will Mia save some of her income this period? Explain your answer in two sentences.