Comparison of Marco's MRT for Storing vs. Lending

Lending's Benefit: Expanded Feasible Set Leads to Higher Utility for Marco

Marco's Optimal Choice When Lending: Point D (60, 48)

An individual has $200 available today. They can consume it now or lend any portion of it at an interest rate of 10% to be repaid in the future. Which of the following combinations of 'consumption now' and 'consumption later' is not in their feasible set?

Financial Planning with Interest

Impact of Interest Rate Changes on Consumption Possibilities

An individual's 'feasible frontier' shows all possible combinations of consumption today and consumption in the future, given an initial amount of money and an opportunity to lend. Match each financial scenario below with the correct maximum possible amount of consumption in the future (assuming all initial money is lent).

An individual has an initial amount of money and can either consume it today or store it for future consumption. They are then offered a new option: they can lend any portion of the money at a positive interest rate. True or False: This new lending opportunity reduces the total set of possible consumption combinations available to the individual.

Comparing Financial Strategies

An individual has an initial endowment of $500 to be consumed either today or in the future. They have the opportunity to lend any portion of this money at an interest rate of 15$200 today, the maximum amount they can have for consumption in the future is $____.

Comparing Investment Opportunities

An individual has an initial endowment of money to be consumed either today or in one year. They also have the opportunity to lend any portion of it at a fixed interest rate. Arrange the following steps in the correct logical order to construct the 'feasible frontier' that represents all possible combinations of consumption today and consumption in one year.

Calculating Implied Interest Rate