How does fall in real interest rate affect consumption, International Economics

Assignment Help:

Q. Consider the economy is initially consuming along the intertemporal budget constraint at point A, where no saving occurs. How does a fall in the real interest rate, r, and affect present consumption?

Answer: A diminishes in the real interest rate r causes the budget line to rotate counterclockwise about point A diminish the slope and causing a rise in present consumption.


Related Discussions:- How does fall in real interest rate affect consumption

Explain the specific objectives of fiscal incentives, Question: (a) ...

Question: (a) Illustrate the differences between inter and intra industry trade. (b) Foreign Investors generally tend to adopt a two-stage process when evaluating count

Welfare effects of tariff, Welfare Effects of Tariff can be understood as f...

Welfare Effects of Tariff can be understood as follows: It is important to understand what the welfare effects for the tariff are. While a tariff might seem desirable because i

International capital mobility, International Capital Mobility is explained...

International Capital Mobility is explained below: The case for the international capital mobility was most evidently articulated by MacDougal in 1960. He presented a framework

International trade, briefly summaries the alternative explanation to the ...

briefly summaries the alternative explanation to the theory of international trade?

Free trade, what are the limitations of net barter terms of trade

what are the limitations of net barter terms of trade

Analyze the effects of an increase in the u.s. money supply, By Using the f...

By Using the figure describing both the U.S. money market and The foreign exchange market, analyze the effects of an increase in the U.S. money supply on the dollar or euro exchang

International monetary system during the post-world war, Q. How did the int...

Q. How did the international monetary system influence macroeconomic policy-making and performance during the post-World War II years during which exchange rates were fixed under t

Explain the financial revolution and monetary affairs, Explain the Financia...

Explain the Financial Revolution and Monetary Affairs

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