1. Which of the following represents the household's lifetime budget constraint?a. q +a₂ = 1b. c₂ = 1/₂+(1+m₂)a₂c₁+c₂/(1+₂) = 1 +32/(1+12)d. U = Inc + Blnc₂2. Which of the following are choice variables of the household?a. Ylb. y2C₁d. 123. If the household can borrow and lend, an increase in y₁ causes which of the following toincrease?a. C1C2c. 92d. all of the above4. For a household that can borrow and lend, the horizontal intercept of a sketch of the lifetimebudget constraint isa. Y1by₁+1y21+12c. Y2d. (1+12)y1+y25. Suppose a household can borrow and lend in a perfectly competitive credit market. AssumeB=0.2 and r2 = 0.10. The value for the optimal choice of a2 when y₁ = 10 and y2 = 0 isa. 1.67b. 0.00c. -5.91(d)-7.58

A household's lifetime budget constraint represents the relationship between the present value of…

1. Which of the following represents the household's lifetime budget constraint? a. q + a₂ = 1 b. c₂ = 3/2 + (1+₂)a₂ q₁ +c₂/(1+₂)=31 +32/(1+₂) d. U = Inc + Blnc₂ 2. Which of the following are choice variables of the household? a. y b. 32 9 d. 12 3. If the household can borrow and lend, an increase in y₁ causes which of the following to increase? a. C1 b C2 c. 92 d. all of the above

1. Which of the following represents the household's lifetime budget constraint? a. q + a₂ = 1 b. c₂ = 3/2 + (1+₂)a₂ q₁ +c₂/(1+₂)=31 +32/(1+₂) d. U = Inc + Blnc₂ 2. Which of the following are choice variables of the household? a. y b. 32 9 d. 12 3. If the household can borrow and lend, an increase in y₁ causes which of the following to increase? a. C1 b C2 c. 92 d. all of the above

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1. Which of the following represents the household's lifetime budget constraint?
a. q +a₂ = 1
b. c₂ = 1/₂+(1+m₂)a₂
c₁+c₂/(1+₂) = 1 +32/(1+12)
d. U = Inc + Blnc₂
2. Which of the following are choice variables of the household?
a. Yl
b. y2
C₁
d. 12
3. If the household can borrow and lend, an increase in y₁ causes which of the following to
increase?
a. C1
C2
c. 92
d. all of the above
4. For a household that can borrow and lend, the horizontal intercept of a sketch of the lifetime
budget constraint is
a. Y1
by₁+
1
y2
1+12
c. Y2
d. (1+12)y1+y2
5. Suppose a household can borrow and lend in a perfectly competitive credit market. Assume
B=0.2 and r2 = 0.10. The value for the optimal choice of a2 when y₁ = 10 and y2 = 0 is
a. 1.67
b. 0.00
c. -5.91
(d)-7.58

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Step 4: explain the results due to an increase in y1

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