At the beginning of the year, the ore price is $1 per oz.
To start producing ore, you need to spend $100.
Ore production possibilities differ across individuals.
Half of you are lenders and half of you are borrowers.
Lenders start with $100 and can either Produce Ore or lend the $100 for a year.
Borrowers do not have $100 and need to borrow $100 to start producing ore.
Beginning of Year
Every year, the Central Bank determines a universal Market Repayment Amount based on everyone's indications.
Use the slider to indicate the smallest dollar amount for which you would lend your $100 instead of producing ore this year.
You will only lend your $100, if the repayment amount is at least as great as what you indicated.
Use the slider to indicate largest dollar amount that you would be willing to repay at the end of a year for a $100 loan.
You will only receive a loan if the repayment amount is smaller or equal to what you indicated.
The Central Bank sets the Market Repayment Amount, such that the number of Lenders supplying a loan equals number of Borrowers demanding a loan.
Be careful! The ore price might change over the course of the year due to inflation. Use the calculator in the top of your screen to base your decision on different inflation forecasts which are equally likely to occur.
End Of Year
Ore is produced and Loans are repaid.
Borrowers sell ore for cash to repay the loan and keep the remaining ore.
Lenders receive the Market Repayment Amount and buy as much ore as possible.
Your Payoff equals the number of ounces of ore you have at the end of the year.
Payoff = Ore you have at the end of the year − 100 oz (value of $100 you had at the beginning of the year.)
Payoff = Ore you have at the end of the year − Ore converted into cash for loan repayment.