How does the decision to borrow depend on o

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Problem: Will the consumer ever want to take a loan now? How does the decision to borrow depend on o (no need to solve explicitly)? How does the decision to borrow depend on y, c, and the size of the desired purchase? Imagine now that the borrower can take an even longer term loan. Do you think this would encourage or discourage borrowing? Why or why not? Would the amount borrowed be higher or lower?

Reference no: EM133614400

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