In a two-period model, an individual earns and consumes C1 in period 1 and only consumes C2 in period 2. Suppose the saving interest rate is 3.3% and the income in period 1 is $4,500. Assuming consumption smoothing, the consumption (C1 or C2) for period 1 and period 2 should be $ A
Q: Thirteen students decide to vote on whether to play basketball B, soccer S, or volleyball V after…
A: Voting refers to the process of choosing leaders or for taking decisions over a set of preferences.…
Q: (a) Why does an 'external social cost' lead to inefficient overproduction? (b) The table below…
A: Externalities is the spillover effects of an economic activities that have an impact on society's…
Q: Firm XYZ produces specialty widgets using labor and capital. The table below shows the productivity…
A: Note:- Since we can only answer up to three subparts, we'll answer first three. Please repost the…
Q: Consider a public goods problem. Assume a community has 10 people each with: MBP = 10 – Q, where Q…
A:
Q: Consider the AA-DD model with flexible exchange rates. Assume the economy is initially at full…
A: Government Spending is defined as the kind of spending on the public sector, and provides services…
Q: Are the following statements true or false? Explain your answer clearly. (a) "The UK referendum…
A: The prisoner's dilemma is a valuable tool for strategic decision-making because it gives a framework…
Q: Calculate total profits in this hypothetical economy: Units of capital: 100 Units of labor: 200 W:…
A: Ans. Total profit is the difference between total revenue and total cost. Total profit = Total…
Q: The US was #1 in math and science education in the 1960s, but now ranks: O outside the top 10 in…
A: Ranking means position on scale.
Q: The W Brewery company produces beer, which it sells to distributors in barrels. The brewery incurs a…
A: Given Fixed cost for beer production =$16,506 Variable cost = $20 per barrel Demand constraint: v=…
Q: Assume that a monopoly loses money in the short run but stays in business. In a graph show the…
A: The long-run is a period of time when all production factors and expenses are unknown. Firms can…
Q: Price (per latte) $4.50 S 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0 200 600 1,000 1,400 1,800…
A: Imposition of tax on a good by government generates tax revenue that goes to government.
Q: Consider an economy where many farmers plant and sell sugar cane for a living. (a) Discuss the…
A: Farmers are frequently helped by governments setting price floors in agricultural markets. A price…
Q: The United States has a comparative advantage in _-skilled labor. This explains why the U.S. is a…
A: A country is a net importer of a particular good when the import of that particular good exceeds the…
Q: Do environmental issues require public intervention in the private marketplace? Distinguish among…
A: Environmental issues have to be addressed through public intervention even if it is taking place in…
Q:
A: *Answer: Skilled labor refers to workers who are highly trained, educated, or experienced and can…
Q: In a flexible exchange rate system with perfect capital mobility, if restrictive fiscal policy is…
A: The measure of the rate that depicts the value of one currency being measured in terms of another…
Q: Assume a company is producing 600 units of output per day and minimizing total cost with the…
A: Short-run marginal cost is the adjustment of complete cost when an extra result is delivered in the…
Q: Primaries are only held in states that cannot decide which nominee to choose in an election year.…
A: Since you have asked unrelated multiple questions, we will solve the first question (question#8) for…
Q: Which one of the following statements is false? Keynes thought that the interest rate was the most…
A: Investment plans, according to Keynes, are determined by evaluating the marginal efficiency of…
Q: here has been some recent debate among economists about how inflation is measured. The Con- mer…
A: Inflation is the consistent rise in the price level of goods/services in the economy. CPI is used to…
Q: Explain wether a fall in a country’s exchange rate will reduce a deficit on the current account of…
A: It is the difference in the level, or quantity, of exports and imports that matters when examining…
Q: Question 48 Use the table, with data for workers and businesses, to answer the question. The payoff…
A: The equilibria are cells A and D.
Q: The U.S. economy is based on_ and O facts, funding income, funding services, information services,…
A: An economy basically refers to a system of production, distribution, and consumption of commodities…
Q: Refer to Table 7.9 and Figure 7.7 above. What is the marginal gain in output from increasing the…
A: Answer to the question is as follows:
Q: Question 10 When the Fed steps in during a recession and adds money to make sure businesses can get…
A: A recession refers to a fall in the economic activity in an economy. This implies there is a lower…
Q: All other things being equal, by how much will nominal GDP expand if the central bank increases the…
A: The overall price level of products and services is proportional to the money supply in an economy,…
Q: A price taking firm has zero fixed cost and increasing marginal cost. What quantity does it produce?…
A: A price-taking firm is a perfectly competitive form that exists in a perfect competition market…
Q: A firm estimates that it will sell N units of a product after spending x dollars on advertising,…
A: We differentiate the N(x) function snd get the maximum value of x.
Q: Deteremine the level of quantities bought and sold at the equilibrium price
A: We are provided that, Qd = a - 50P Qs = -100 + 20P The market will be in equilibrium when Qd = Qs…
Q: Consider an exchange economy with two agents, A and B, and two goods, 1 and 2. Agent A will only…
A: Total supply of a good is equals the endowments of two goods. We have 2 Goods with two person.
Q: Explain the Clayton Antitrust Act (1914).
A: The Clayton Antitrust Act was enacted in the year 1914 i.e. more than 100 years ago.
Q: Suppose that demand is Qip)-2000-4p. Consider the marginal revenue curve of a monopolist who…
A: Demand : Q=2000-4P Inverse Demand : P=(2000-Q)/4 Total Revenue : TR=P*Q TR=(2000Q-Q2)/4 Marginal…
Q: According to Adam Smith money can be compared to our High Way System. Describe it?
A: Adam Smith was an economist who is known as the 'father of modern economics' due to his work in 'The…
Q: Name and discuss the factors that shift the LM Curve. Give 2 examples with the aid of a diagram of…
A: The LM curve i.e. " Liquidity Preference-Money Supply" shows all the levels of income and interest…
Q: The closed economy of Sokovia has a GDP of 150 billion dollars and a marginal propensity to save of…
A: Multiplier shows that how much of the countries GDP (Y) changes in response to change in the…
Q: Ca) = 0.07qi, ssuming no fixed costs for i = 1, 2. he Cournot equilibrium quantities are q1 and q2 =…
A: Cournot competition is an financial version used to explain an enterprise shape wherein agencies…
Q: Consider a firm in a Perfectly Competitive industry. Suppose the price in this industry is $26. The…
A: In a perfectly competitive market, firms do not have any market power so price is constant. Price is…
Q: The accompanying table gives part of the supply schedule for smart speakers in the United States.…
A: Here, the given table shows the price and quantity supplied of speaker in the market, and there are…
Q: Suppose that both Friedman and Fisher are absolutely correct. Assume that over many years money…
A: Money Supply refers to the quantity of money that is supplied or released into the economy of a…
Q: As new firms enter a monopolistically competitive industry, the demand and marginal revenue curves…
A: Monopolistic competition is a type of market structure. It has features of both i.e. perfect…
Q: Find the consumers' surplus at a price level of p = $130 for the price-demand equation below. p=…
A:
Q: Suppose a price-taking profit-maximising firm produces output in the short run using only labour as…
A: First order condition says that differentiation of profit with respect to L is zero.Second order…
Q: Billy is hiring workers to help him install solar panels. The table below presents the marginal…
A:
Q: Scholars have identified many different broad “types" of interest groups. Which type can best be…
A: Today, there are so many organised lobbyists. They representing all parts of society and addressing…
Q: Suppose all firms in a competitive industry are operating at output levels for which P equals LRAC.…
A: In a competitive market, numerous producers compete to supply the products and services that we, as…
Q: A monopolist has the following average révenue and lon AR = a - bQ AC = C (a > 0, b > 0, 0 <c< a) a.…
A: The above question is based on the relations between different types of costs involved in the…
Q: the decision rule for rejecting the null hypothesis H0H0.
A: Solution 1)Consider the above given that Null Hypothesis H0: P1=P2 Alternate Hypothesis Ha :…
Q: List a chart with Numbers of the Economic Lost of Wind turbines due to environmental Concern
A: Wind energy has developed quickly since the turn of the 100 years. Complete worldwide introduced…
Q: Higher capital requirements are good news for banks, their shareholders, and depositors and for…
A:
Q: QUESTION 12 What condition(s) are necessary for disequilibrium unemployment to exist? O a. Wages to…
A: 12. In the market, disequilibrium refers to the situation when there is a mismatch between market…
In a two-period model, an individual earns and consumes C1 in period 1 and only consumes C2 in period 2. Suppose the saving interest rate is 3.3% and the income in period 1 is $4,500. Assuming consumption smoothing, the consumption (C1 or C2) for period 1 and period 2 should be $ A . Compute A.In a two-period model, an individual earns and consumes C1 in period 1 and only consumes C2 in period 2. Suppose the saving interest rate is 3.3% and the income in period 1 is $4,500. Assuming consumption smoothing, the consumption (C1 or C2) for period 1 and period 2 should be $ A . Compute A.
Step by step
Solved in 2 steps
- Consider the following two-period model of consumption and saving: Utility In(C1) + In(C2) C1 C2/(1+r) Y1 + Y2/(1+r) where Y1 = 4, Y2 = 7 and r = 0.14. Find a numerical solution for period 2 consumption, C2. (State your answer to 2 decimal places.)Assume that that tax revenues (T) are proportional to income (Y). That means if the tax rate is equal to t, then we have T = tY.Also, consumption (C) and investment (I) functions are given as the following: C = a + b (Y – T) [where a and b are constant]I = c – dr. [where c and d are constant, and r is the interest rate] A) Find the expression of the government purchase multiplier. (Use derivative) B) What will happen to multiplier if tax rate increases? What will happen to multiplier if MPC increases?Consider a two-period consumption saving model and let ci and c2 denote the first and second period consumption, respectively. Assume that the interest rate at which the consumer may lend or borrow is 10%. Suppose that a consumer's utility function is u (C1, c2) = c1 + 20 c2. The consumer first period income is I1 = $100 and the present value of her income stream is $330. (a) What is the optimal consumption stream (consumption bundle) of this consumer? (b) Is this consumer borrower or lender? How much does she borrow or lend? (c) What is the effect of a reduction of the interest rate to 5% on the consumer's optimal first-period saving? (Make sure to take into account the effect of the decline in the interest rate on the present value of the consumer's income stream.)
- Question 13 0/1.5 points Consider the two-period model. Consumer's have preferences over current and future consumption (c and c). Households only receive income in the second period, y! That is, income in the first period is equal to zero, y=0. Households can save, s, for the second period and receive interest rate r. The slope of the budget constraint is -(1+r). As such, an increase in r would increase the slope in (c,c') space (the standard graph). The government implements a proportional income tax, OSuppose that c= a+by, where c= consumption, a = consumption at zero income, b = the slope of the consumption from function, and y = income, a) are c and y positively related or are they negatively related? b) If graphed, would the curve of this equation slope upward or downward? c) What is the value of c if a = 10, b = 50 and y = 200? d) what is the value of y if c = 100, a = 10 and b = 25?Consider the following information on aggregate income, consumption expenditure, and planned investment for a country:Assume an intertemporal budget constraint that shows how consumption can be traded off between two periods, t and t+1. Assume the consumer can save and borrow at the same interest rate of 10%. Assume the consumer collects income of $100 in each period. To gain an extra $10 dollars in period t+1, what must the consumer give up in period t? 11 10 1 10QUESTION ONE Consider a model with two periods, each with one composite consumption good. Prices are the stable and normalized to 1. Suppose a consumer is endowed with income 20 in the first period and 60 in the second period. The consumer receives a 10% interest rate on savings and is subject to a 20% interest rate on borrowing. Regulations prohibit the consumer from borrowing more than 20. (a) Find this consumer's budget constraint. (b) Carefully graph the budget set. Label all intercepts.Use the graphs to illustrate the effect of a decrease in consumer income expectations on the consumption (C) function and the savings (S) function. Real consumption 500 450 400 350 300 250 200 150 100 50 0 0 50 C = DI с 100 150 200 250 300 350 400 450 500 Real disposable income (DI) Real savings 500 450 400 350 300 250 200 150 100 50 0 -50 -100 -150 0 50 100 150 200 250 300 350 Real disposable income (DI) S 400 450 500Consider a two-period consumption saving model and let f1 and f2 denote the first and secondperiod consumption, respectively. Assume that the interest rate at which the consumer may lend or borrowis 10%. Suppose that a consumer’s utility function is x (f1> f2) = f1 + 20√f2= The consumer first periodincome is L1 = $100 and the present value of her income stream is $330=(a) What is the optimal consumption stream (consumption bundle) of this consumer?(b) Is this consumer borrower or lender? How much does she borrow or lend?(c) What is the effect of a reduction of the interest rate to 5% on the consumer’s optimal first-periodsaving? (Make sure to take into account the effect of the decline in the interest rate on the present value ofthe consumer’s income stream.)7. Consider the model where an individual has wealth k which they can either save or consume. If they save it, they receive a fixed and exogenous return r. The instantaneous utility function is given by: u(c, k) = c + a(k) where c is consumption, k is wealth, and a(k) is a function that defines the utility that an individual gets from holding wealth. The growth in wealth is given as the returns on wealth rk, plus income from working z(t), minus consumption c(t). a. Write out the differential equation for wealth. b. For an infinite time model, set up the optimal control problem with discounting at a rate 8. c. Write the current-valued Hamiltonian of this problem. d. Derive the steady-state level of consumption.assume you are given a $100 raise, and decide to save $20 of that money. also assume that if you make zero income in a year, you will still spend $7000. a.) what is your consumption function? b.) if you earn $20000 in a year how much will you spend? c.) will you be able to save while earning the above income?SEE MORE QUESTIONS