Solution-Function of the real interest rate in economy

Function of the real interest rate in economy

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In an economy that only produces corn, people live in 2 periods and seek to maximize the logarithmic utility function U=ln(C1)+ln(C2). There are 10 people. Each has after tax real income of 35,000 bushels of corn in period 1 and 156,000 bushels in period 2. Investment demand is 100,000 bushels of corn no matter what the real interest rate is. Find period 1 savings per person as a function of the real interest rate in the economy.

Reference no: EM132258341

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Function of the real interest rate in economy

Reference no: EM132258341

Reference no: EM132258341

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