1. Copyright © 2002 Pearson Education, Inc. Slide 1

2. Copyright © 2002 Pearson Education, Inc. Slide 2 A Two-Period Model: The Consumption-Saving Decision and Ricardian Equivalence Chapter 6

3. Copyright © 2002 Pearson Education, Inc. Slide 3 Figure 6-1 Consumers Lifetime Budget Constraint

4. Copyright © 2002 Pearson Education, Inc. Slide 4 Figure 6-2 A Consumers Indifference Curves

5. Copyright © 2002 Pearson Education, Inc. Slide 5 Table 6-1

6. Copyright © 2002 Pearson Education, Inc. Slide 6 Figure 6-3 A Consumer Who Is a Lender

7. Copyright © 2002 Pearson Education, Inc. Slide 7 Figure 6-4 A Consumer Who Is a Borrower

8. Copyright © 2002 Pearson Education, Inc. Slide 8 Figure 6-5 The Effects of an Increase in Current Income for a Lender

9. Copyright © 2002 Pearson Education, Inc. Slide 9 Figure 6-6 Percentage Deviations from Trend in GDP and Consumption, 1982-1999

10. Copyright © 2002 Pearson Education, Inc. Slide 10 Figure 6-7 An Increase in Future Income

11. Copyright © 2002 Pearson Education, Inc. Slide 11 Figure 6-8 Temporary Versus Permanent Increases in Income

12. Copyright © 2002 Pearson Education, Inc. Slide 12 Figure 6-9 Stock Prices and Nondurable Consumption, 1947-1999

13. Copyright © 2002 Pearson Education, Inc. Slide 13 Figure 6-10 Scatter Plot of Percentage Deviations from Trend in Nondurable Consumption Versus Percentage Deviations from Trend in a Stock Price Index

14. Copyright © 2002 Pearson Education, Inc. Slide 14 Figure 6-11 An Increase in the Real Interest Rate

15. Copyright © 2002 Pearson Education, Inc. Slide 15 Figure 6-12 An Increase in the Real Interest Rate for a Lender

16. Copyright © 2002 Pearson Education, Inc. Slide 16 Figure 6-13 An Increase in the Real Interest Rate for a Borrower

17. Copyright © 2002 Pearson Education, Inc. Slide 17 Table 6-2

18. Copyright © 2002 Pearson Education, Inc. Slide 18 Table 6-3

19. Copyright © 2002 Pearson Education, Inc. Slide 19 Figure 6-14 Example with Perfect Complements Preferences

20. Copyright © 2002 Pearson Education, Inc. Slide 20 Figure 6-15 A Consumers Demand for Current Consumption Goods, c d, as a Function of Current Income

21. Copyright © 2002 Pearson Education, Inc. Slide 21 Figure 6-16 A Shift in a Consumers Demand for Current Consumption

22. Copyright © 2002 Pearson Education, Inc. Slide 22 Figure 6-17 Ricardian Equivalence with a Cut in Current Taxes for a Lender

23. Copyright © 2002 Pearson Education, Inc. Slide 23 Figure 6-18 A Consumer Facing Different Lending and Borrowing Rates

24. Copyright © 2002 Pearson Education, Inc. Slide 24 Figure 6-19 Effects of a Tax Cut for a Consumer with Different Borrowing and Lending Rates

25. Copyright © 2002 Pearson Education, Inc. Slide 25 Figure 6-20 Deviations from Trend in Consumption, 1947-1999