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6. And now for some Shakespeare (who says economists aren't cultured!). In Shakespeare's play Hamlet, Ophelia says, If I could lend money at the

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6. And now for some Shakespeare (who says economists aren't cultured!). In Shakespeare's play Hamlet, Ophelia says, "If I could lend money at the rates I must pay to borrow, I would. And if I could borrow money at the rates I receive when I lend, I would again. But forsooth, although I spend, I neither borrow nor lend." Contrary to Shakespeare's depiction of Ophelia in Hamlet, this state- ment suggests that she is entirely rational according to our intertem- poral model. Draw a diagram to show how Ophelia's remarks can be consistent with rational behaviour if she pays a higher interest rate when she borrows than she gets when she lends (saves). Explain what is happening here.

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