please answer all of them **1. Consumption, Classical and Keynesian**Consider The Consumption Theory we discussed in class when there are MANY periods (say, a person who is going to live for 70 years). Imagine that this person does not care about his or her children. This is what we called the Life Cycle Hypothesis.- **(i)** How many bonds will this person leave when he dies?- **(ii)** What is his lifetime Intertemporal budget constraint?- **(iii)** What is the marginal propensity to consume out of temporary income? What does it depend on?- **(iv)** What is the marginal propensity to consume out of permanent income? Does it depend on the same factors you mentioned in the previous question?Imagine that this person actually cares for his or her children in the sense that his utility function includes the utility of his children.- **(v)** How many bonds will this person leave when he dies? Is your answer different from (i)? If so, why?- **(vi)** What is the marginal propensity to consume out of temporary income? Is it the same as in (ii)? If it is not, explain why.- **(vii)** What is the marginal propensity to consume out of permanent income? Is it the same as in (ii)? If it is not, explain why.Consider the Keynesian Liquidity Constrained consumer (LCC).- **(viii)** What is the marginal propensity to consume out of temporary income? What does it depend on?- **(ix)** What is the marginal propensity to consume out of permanent income? Does it depend on the same factors you mentioned in the previous question?

Quite possibly the most famous and notable theory is the Keynesian theory, presented by business…

1 Consumption, classical and Keynesian Consider The Consumption Theory we discussed in class when there are MANY periods (say, a person who is going to live for 70 years). Imagine that this person does not care about his or her children. This is what we called the Life Cycle Нурothesis. • (i) How many bonds will this person leave when he dies? (ii) What is his lifetime Intertemporal budget constraint? (iii) What is the marginal propensity to consumer out of temporary income? What does it depend on?

1 Consumption, classical and Keynesian Consider The Consumption Theory we discussed in class when there are MANY periods (say, a person who is going to live for 70 years). Imagine that this person does not care about his or her children. This is what we called the Life Cycle Нурothesis. • (i) How many bonds will this person leave when he dies? (ii) What is his lifetime Intertemporal budget constraint? (iii) What is the marginal propensity to consumer out of temporary income? What does it depend on?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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