Page "Intertemporal choice" Paragraph 17
from
Wikipedia
If the consumer is a net saver, an increase in interest rate will have an ambiguous effect on the current consumption. If the consumer is a net borrower, an increase in interest rate will reduce his current consumption. A consumer maybe a net saver or a net borrower.
If he's initially at a level of consumption where he's neither of the above ( i. e. a net borrower or net saver ), an increase in income may make him a net saver or a net borrower depending on his preferences.
An increase in current income or future income will increase current and future consumption ( consumption smoothing motives ).
Page 1 of 1.
2.157 seconds.