Using diagrams as appropriate, explain how borrowing, lending, storing, and investing allow individuals to rearrange their capacity
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Question:
Using diagrams as appropriate, explain how borrowing, lending, storing, and investing allow individuals to rearrange their capacity to buy goods and services across time. Your answer should encompass the following considerations:
How someone's degree of impatience determines how much they borrow or lend.
In what ways borrowers and lenders are affected by interest rate changes (you can use of the recent interest rate increases by the Bank of England as an example).
Why the relationship between the lender and the borrower is a principal–agent problem, how it may be resolved, and what this means for those with less wealth.
Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
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