Evaluate the role of interest rates and current

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1. Draw indifference curves for a patient consumer compared to an individual with a need for instant grati?cation.

2. What would the budget constraint look like if it were only possible to borrow at an in- terest rate higher than the deposit rate?

3. When in?ation increased sharply in the 1970s, the savings rate increased. Evaluate the role of interest rates and current and future income in explaining this phenomenon.

4. The permanent income model assumes that you treat your current ?nancial wealth and the present value of your discounted future income in the same way. Discuss the plausi- bility of this result.

Reference no: EM13887938

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