Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
1. Suppose that there is a credit market imperfection because of asymmetric information. In the economy, there are N consumers. A fraction b of consumers consists of lenders, who each receive an endowment of y units of the consumption good in the current period and 0 units in the future period. A fraction of borrowers are good borrowers, who each receive an endowment of 0 units in the current period and y units in the future period. Finally, the left consumers are bad borrowers, who receive 0 units of endowment in both periods. Banks cannot distinguish between good and bad borrowers. The government sets G and G' as government spending, and each consumer is asked to pay a lump-sum tax of t in the current period and t' in the future period. The government also cannot distinguish between good and bad borrowers, but as with banks can observe endowments. The lending rate is r.
a. Write down the government's budget constraint.
b. Find out the budget constraints of good borrowers, bad borrowers, and lenders respectively.
c. Suppose that the government decrease t and increase t' in such a way that the government budget constraint holds. Does this have any effect on each consumer's decisions about how much to consume in each period and how much to save? Explain.
d. Does Ricardian equivalence hold in the economy? Explain why or why not?
what is the importance of law of supply
A Competitive Short Run Supply Curve of Firm * Observations: - P = MR - MR = MC - P = MC * Supply is amount of output for every possible price. Thus: - If
1
Define why prices is significant for economy Reason for using different weights is that some prices are more significant than others for economy. Price of gasoline, for instanc
how does utility figure in the analysis of consumer demand
Demand Function The function capturing the dependent relationship between the price people are willing to pay for products or service and other factors related to that product
Type of total outlay
COBWEB MODEL: Concept of dynamic stability: A market equilibrium is said to dynamically stable only when disequilibrium price and quantity move and over time reach to any eq
Measures to control inflation: Fiscal policy is one of the two main macroeconomic policies used to control aggregate demand and thereby achieve economic stability. Fiscal meas
Price System: Demand is the quantity of a commodity that consumers are willing and are able to buy at a given price at a given time period when all other things remain the sam
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!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd