International Borrowing and Lending Intertemporal Production Possibilities and Trade Imagine an economy that consumes only one good and will exist for only two periods, which we will call present and future Intertemporal production possibility frontier It represents a trade-off between present and future production of the consumption good Its shape will differ among countries Some countries will be biased toward present output Some countries will be biased toward future output Copyright C 2003 Pearson Education, Inc Slide 7-11Copyright © 2003 Pearson Education, Inc. Slide 7-11 ▪ Intertemporal Production Possibilities and Trade • Imagine an economy that consumes only one good and will exist for only two periods, which we will call present and future. • Intertemporal production possibility frontier – It represents a trade-off between present and future production of the consumption good. – Its shape will differ among countries: – Some countries will be biased toward present output. – Some countries will be biased toward future output. International Borrowing and Lending