User Account

All Pages

consumption , Macroeconomics

Assignment Help:
. (40 points) Consider two consumers, A and B. A and B both want perfect consumption smoothing (c = cf) and both have no current wealth. However, the two consumers have different income streams. Person A’s current income, yA, = 100, and future income, yfA, = 121. Person B’s current income, yB, is 120, and future income, yfB, = is 99. The real interest rate is 10%.

(a). Calculate the present value of lifetime resources (PVLR) for consumer A and consumer B, respectively.
(b). Draw consumer A’s budget constraint. How does the budget constraint of consumer A compare to the budget constraint of consumer B? Explain.
(c). Find consumer A’s optimal lifetime consumption plan, (cA, cfA). How does consumer B’s optimal lifetime consumption plan, (cB, cfB), compare to consumer A’s lifetime consumption plan? Explain.
(d). Is consumer A a current saver or a current borrower? Explain. Is consumer B a current saver or a current borrower? Explain.
(e). Draw a graph that illustrates how an increase in the interest rate (above 0.10) will affect the budget constraints of consumer A and consumer B. How does the budget constraint of consumer A compare to the budget constraint of consumer B?

Related Discussions:- consumption

Clasical model., if we impose any rule and regulation on clasical model lik...

if we impose any rule and regulation on clasical model like not expoit polutionso what is effect on factor of clasical model

Economic growth, factors in economic growth

factors in economic growth

Explain about phillips curve, Q. Explain about Phillips curve ? The Ph...

Q. Explain about Phillips curve ? The Phillips curve  According to traditional Phillips curve, there is a negative and stable relationship between unemployment andwage in

Explain ad-curve at a given point in time, AD-curve, just like before, disp...

AD-curve, just like before, displays combinations of Y and P where both goods market and money market are in equilibrium. At any given instance, even when we have inflation, aggreg

Supply & Demand Graph, Ok, so the supply curve for goal in the U.S. is perf...

Ok, so the supply curve for goal in the U.S. is perfectly elastic, while the demand curve has the usual shape. In 2011, the U.S. used 1,003 million tons of coal at an average price

Consumption, Consider two consumers, A and B. A and B both want perfect con...

Consider two consumers, A and B. A and B both want perfect consumption smoothing (c = cf) and both have no current wealth. However, the two consumers have different income streams.

Pseudoreplication, Give your own example of "pseudoreplication" (sensu Hurl...

Give your own example of "pseudoreplication" (sensu Hurlbert 1984) in an experiment. How does pseudoreplication cause problems for correct inferences from experiments?

monetary account , link of monetary account with other sectors and its mea...

link of monetary account with other sectors and its meaning

Microsoft case study, 2.2 "Our business model works even if all internet so...

2.2 "Our business model works even if all internet software is free ....... We are still selling operating systems. What does Netscape''s business model look like? Not very good."

Fisal Policy, what is fiscal policy?

what is fiscal policy?

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd