Content and teaching ideas for Intermediate Microeconomics
Friday, April 1, 2011
Shifting Income over Time
The video develops the notation and the model for a two period choice problem where the periods denote the present and the future. It considers the problem for both a borrower and a saver and by working through the algebra shows that an increase in the interest rate is like an increase in the price of present consumption for a borrower but is like a fall in the price of future consumption for a saver.