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Asked Nov 19, 2019
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For a competitive equilibrium in a two-period model, must there be an equal amount of borrowing and lending?

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Expert Answer

Step 1

Two-period model shows how the consumers trade off their current consumption with the future consumption given their present and future income, and real interest rates (r) .

A consumer in the present period can either consume more or less than his current income thus, adjusting his future consumption accordingly...

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Business

Economics

Decisions and trade- offs

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