M & B 4th Edition by Dean Croushore

تمرين 8

In the two-period model described in this chapter, suppose that a household's income in period 1 increases at the same time that the interest rate decreases. Is the household better off or worse off because of this change? What will happen to its savings? You might want to think about a household that was a saver before the change and another that was a borrower.