THE THEORY OF INTEREST

all parallel, until they so slant that the center of gravityof the Q’s shall coincide with the center of gravity o’fthe P’s. This slope, thus determined, signifies the rateof interest which will clear the market.

Let us recapitulate. We have given:

(1) The Market lines, just as in the first approxima-tion.

(2) The families of Willingness lines, one family foreach individual, just as in the first approximation.

(3) The Opportunity lines, one only for each indi-vidual, that is, a series of points takes the place of thesingle point P x in the first approximation.

We also have, correspondingly, three rates:

(1) The market rate of interest represented by theslope (over and above that of 100 per cent) of each andevery straight Market line.

(2) The degree of impatience, or rate of time prefer-ence, one of each person, represented by the slope of theWillingness lines and depending on his income situation,as finally determined after all adjustments have beenmade.

(3) The rate of return over cost, or the investmentopportunity rate, one for each person, represented by theslope of the Opportunity line and depending on theposition chosen on it.

The charts of this chapter interpret the second ap-proximation exactly as the charts of Chapter X inter-preted the first approximation, but with two new invest-ment opportunity principles added to the four principlescommon to both Chapters X and XI and already geomet-rically interpreted in Chapter X. That is:

The Investment Opportunity Principle A is repre-sented by the Opportunity line.

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