IN GEOMETRIC TERMS

supplies next year. On the other hand, a man who is moreabundantly provided with income this year than he ex-pects to be next year would be situated below the midwayline, his longitude being greater than his latitude.

In this way, within the northeast quadrant (the onlyone shown in the charts) we can, by fixing the pointP at all possible positions, represent all possible combina-tions of this year’s and next year’s income.

§3. The Market Line

Assuming that the individual’s incomes for all otheryears remain unchanged, we shall now study the effects,for this one man, of changing the income amounts of thetwo years pictured. These changes are assumed to becaused wholly by trading some of his income of one yearfor some of ano.ther man’s income for the other year.Except for such trading, his income situation is supposedto be fixed. He has, let us suppose, a rigid allowance of$1000 for this year and $1200 for next year with no op-portunity to change these figures except by swappingsome of one year’s income for some of another’s.

Suppose, for instance, that at a rate of interest of 10per cent the individual borrows $100 in 1930 in returnfor $110 which he is to pay back in 1931. In Chart 23,such changes would be represented by lengthening the1930 vertical line from $1000 to $1100 and by shrink-ing the 1931 vertical line from $1200, not to $1100 but to$1090. In Chart 25 these changes are represented byshifting the income position from P u the originally fixedincome position, to M lt whose longitude is $100 moreand latitude $110 less.

If, as shown in Chart 26, the individual borrows asecond $100, promising to repay $110, his income position

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