I need clarification on this question and how to understand the changes by derivatives.
Roberto's optimal amount of savings is s = m - c. So,
6 - 1 M(2 + 1) 1 + + 1
m1 + m21 + r - 1 s1 = m1 - 1 + 1 + r - 1
income - Consumption
Recall that m2 = 0. So, we can write his optimal savings as ! Ma s1 = m1(L + T) - 1 at1
Roberto's savings increase with the interest rate if and only if & < 1. Also, his savings increase with & if & > 1. [Can you verify these statements using derivatives?]
3 m(a + -m 2 at) Ca+