Chapter 1. Chapter 25

Step 1

Work It Out
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You must read each slide, and complete any questions on the slide, in sequence.

Question

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Step 2

Question

For the consumer in the situation just described, he would BmqdVJkbBDPRm0U/v7J+NJNHUjX7eZdkkHicJgY81UaNrQXAPDlQ/WEpppVKmGKuC30oDP9WXrYdf8SFnlUyvIQfxiPAVd27Xlawx2i6MIKAe/44yTwGWiVN8HxqTl9N6gxpDMkZDtk=.

1:50
Correct! Assuming that the consumer wants to smooth consumption over time and that he can borrow freely, we would expect this consumer to borrow money from his parents. If he wanted the same amount of consumption in each period, we would expect him to borrow $100.
Sorry! Consider what this consumer might do if he wanted to smooth consumption over the two periods. To review the budget constraint, please see the section “The Budget Constraint.”