Foundational Assumptions of a Simple Savings Model
An economist is building a simple model where an individual saves for the future by storing physical currency. For this method to perfectly preserve the individual's ability to buy goods and services in the future, what two critical conditions must be assumed to be true? Briefly explain the importance of each condition.
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Introduction to Microeconomics Course
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Ch.9 Lenders and borrowers and differences in wealth - The Economy 2.0 Microeconomics @ CORE Econ
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Foundational Assumptions of a Simple Savings Model
For an individual to perfectly transfer $100 of today's purchasing power to next year simply by storing the cash, it is sufficient that the cash is kept in a location where it cannot be stolen.