If the interest rate expressed as a fraction is 005 per


Smith lives in a world with two time periods. His income in each period, which he receives at the beginning of each period, is $210. If the interest rate, expressed as a fraction, is 0.05 per time period, what is the present value of his lifetime income? Draw his intertemporal budget constraint. On the same axes, draw Smith's intertemporal budget constraint when r = 0.20.

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Econometrics: If the interest rate expressed as a fraction is 005 per
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