Intertemporal Choice Flashcards
1
Q
PV
A
FV/(1+r)
2
Q
Changes in Interest Rate and Inflation Rate
A
3
Q
Income Effect
A
An increase in r increases income, increasing consumption in both periods.
4
Q
Substitution Effect
A
An increase in r makes more attractive in period 2 (C2 increases)
5
Q
Normal BC
A
6
Q
Price BC
A
7
Q
Inflation BC
A
8
Q
Slope BC
A
