Intertemporal choice/Savings Behavior

[kangkan]

HI, i got this question from Bernanke and Abel.- Consumers typically pay a higher rate during borrowing then lending.Draw cosumer's budget constraint..i have assumed Rb-rate for borrowing and Rl-rate for lending,y1 is the income in period 1 and y2 is the income in period 2,wealth.. please let me if the following budget line is correctintertemporal_choice.png

[economist]

Yes. Its correct.