Question

What determines whether an individual is a net borrower or a net lender?

Answer 1

A net lender is someone who saves and lends more than he consumes or spends. so his exoenditure is less than his income and the rest is lended as loans . also it implies that it is the net position ie after all the transcations the individual is performing , he finally has more income than the expenditure .

on the other hand the net borrower is one who after all transactions is having more borrowing or reqwuires loans in order to fulfill his expenditure . so his income is less than the expenses and hence he needs to borrow.

in case of involvement of intyerest rate the net borrower requires to pay the interest and is in a worse position if the interest is higher and the net lender gets the interest rate and is in a better position of he gets the higher interest rate .