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

Investments has a larger future value, Which of the following investments h...

Which of the following investments has a larger future value: Investment A an $1,000 investment earning 5% per year for 6 years? Or Investment B a %500 investment earning 10% per y

Neo-classical thinking on growth, Neo-classical thinking on growth: Neo...

Neo-classical thinking on growth: Neo-classical  thinking  on  growth  is  owed  to  the Robert  Solow  whose  exogenous  growth models in the of the mid-20th century remained

Energy infrastructure, Energy Infrastructure: Electricity is one of th...

Energy Infrastructure: Electricity is one of the main determinants of the quality of life. In India, the power sector has not kept pace with the growth in demand resulting in

Growth of trade, Growth of Trade: As far as the growth of exports and ...

Growth of Trade: As far as the growth of exports and imports are concerned,  it is evident  from Table 17.2  that India has performed better than the world growth  rates  in

Firm''s total revenues, How much will your firm's total revenues (revenues ...

How much will your firm's total revenues (revenues from both products) change if you increase the price of good X by 2 percent?

Decision maker''s approach or logic, Listed here are several examples of ba...

Listed here are several examples of bad, or at least questionable, decisions. Evaluate the decision maker's approach or logic. In which of the six decision steps might the decision

Live around a hazardous waste dump, : Suppose that 100 people live around a...

: Suppose that 100 people live around a hazardous waste dump. If the people continue to live there for 20 years, one of them will likely contract a painful, non-fatal cancer that w

The circular flow of income in an open economy, The circular flow of income...

The circular flow of income in an open economy   An open economy is one in which international trade exists. Assume also that there is government spending and taxation. Thus

Market structures, illustrate and discuss the market structures competitive...

illustrate and discuss the market structures competitiveand non competitive for price determination

Average cholesterol level, In a sample of 80 people who have had strokes, t...

In a sample of 80 people who have had strokes, the average cholesterol level was 250 with a standard deviation of 70. In order to test the hypothesis (at the 5% level of significan

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