Borrowing, Lending, and the Price of Time
Consider two individuals, Alex and Ben. Alex has a strong preference for consuming goods and services now rather than in the future. Ben is more willing to postpone his consumption. In a market where they can borrow or lend money at a positive interest rate, which individual is more likely to be a borrower and which is more likely to be a lender? Explain your reasoning by relating their different preferences to the concept of the interest rate as a cost.
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Social Science
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CORE Econ
Economics
Economy
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
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