Selim has no income in period 1 (consumption now) and an income of 1800₺ in period 2 (consumption later). The current interest rate is 20 % (r=0.2) on consumer loans. Based on this information, answer the following questions a. What is the maximum amount that Selim can borrow to spend in period 1? Explain your answer. b. Can he spend 600 in period 2 and borrow 1000 in period 1?

Selim has no income in period 1 (consumption now) and an income of 1800₺ in period 2 (consumption later). The current interest rate is 20 % (r=0.2) on consumer loans. Based on this information, answer the following questions a. What is the maximum amount that Selim can borrow to spend in period 1? Explain your answer. b. Can he spend 600 in period 2 and borrow 1000 in period 1?

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter13: Inflation

Section: Chapter Questions

Problem 12SQ

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