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Use the concepts of income effect and substitution effect to explain why the effect on desired...

Use the concepts of income effect and substitution effect to explain why the effect on desired saving of an increase in the expected real interest rate is potentially ambiguous. (For full credit, make sure you differentiate between borrowers and savers) Draw the saving curve for when (a) substitution effect dominates (b) income effect dominates (Make sure you label the axes)
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