Since interest rates for borrowing are usually higher than interest rates for savings, the intertemporal budget constraint has an inward kink for individuals that earn income now and in the future.
Answer the following statement true (T) or false (F)
False
Rationale: Individuals who earn income both now and in the future have an endowment bundle that lies in the interior of our current consumption/future consumption graph. Anywhere to the left of this, they save -- and anywhere to the right of it they borrow. If interest rates on saving are lower than on borrowing, this implies that the budget will be shallow initially and then gets steep when borrowing commences. The kink therefore points out, not in.
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