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EC311 · Intermediate Microeconomics

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EC311 / TOPIC 14

5.1 Consumption, saving and borrowing

One idea · follow the reasoning · then practise1 / 9

01

How does interest change the price of present relative to future consumption?

Two clocks, rising stacks of coins, and a balance holding a bank building and a blue geometric object
VISUAL NOTE · Time and risk Move purchasing power across time

How can credit markets smooth consumption when income differs across dates?