Two-period model, Macroeconomics

Assignment Help:
Suppose that a household in a two-period model has income of $30,000 in period 1 and $25,000 in period 2, and the interest rate is 75 percent. Assume that the price of the good is $1 in boh periods. Suppose that the household decides to consume 26,000 in period 1 and 32,000 in period 2. Now suppose that the interest rate falls 50 percent, and the household decides not to borrow or lend at all. Is the household better off or worse off with the higher interest rate?

Related Discussions:- Two-period model

Explain the gains from trade of market, Explain the Gains from Trade of mar...

Explain the Gains from Trade of market. Producer Surplus, Consumer Surplus, Gains through Trade and Efficiency of Markets: Consumers and producers both are better off since

Value to change expect the market, You just inherited a house with a market...

You just inherited a house with a market value of $300,000, and do not expect the market value to change. Each year, you will pay $1,000 for utilities and $3,000 in taxes. You can

Kinked demand curve, disuss with an aid of a diagram the kinked demand cur...

disuss with an aid of a diagram the kinked demand curve

Components of trade policy, COMPONENTS OF TRADE POLICY: External secto...

COMPONENTS OF TRADE POLICY: External sector reforms beginning with 1991 included dismantling of  trade restrictions along with tariff rationalization, a move towards current a

Probability that a randomly selected person from the city, In a city of 120...

In a city of 120,000 people there are 20,000 Norwegians. What is the probability that a randomly selected person from the city will be Norwegian?

Tax credit, Suppose that an investment tax credit is stated to be temporary...

Suppose that an investment tax credit is stated to be temporary in nature, and the credit will be 10% on newly acquired capital (investment) equipment and will last just one year o

Explain demand management of keynesian economists, Explain demand managemen...

Explain demand management of Keynesian economists The demand management of Keynesian economists of 50's and 60's is attacked by free-marketers for ignoring the importance of s

Marginal propensity to consume economy, Consider the following: An econo...

Consider the following: An economy is found to have output, y = 20000 Also assume that the government runs a deficit where tax revenue T= 4000 and government expenditures G=5000

Farmer grows wheat and sells, A farmer grows wheat and sells it to a miller...

A farmer grows wheat and sells it to a miller for $1; the miller turns the wheat into flour and sells it to a baker for $3; the baker uses the flour to make bread and sells the bre

Fixation, what is the basis of fixation

what is the basis of fixation

Write Your Message!

Captcha
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!

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