Ci and Yi are consumption and income at period i (i=1, 2). When the world interest rate is r (100xr%), C2= agent has the utility function U=C1C2. In an autarky economy, when Y1=100 and Y2=132, the level of the utility is with r=0.1, the level is compared to C1 with r=0.1. Choose the reason for this change. OC1 becomes cheaper. OC2 becomes cheaper. Opportunity cost of interest rate becomes smaller. When the interest rate rises by 0.1, C2 changes by ◆ A representative In an open economy compared to C2 with r=0.1. C1 changes by

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Ci and Yi are consumption and income at period i (i=1, 2). When the world interest rate is r (100xr%), C2=
agent has the utility function U=C1C2. In an autarky economy, when Y1=100 and Y2=132, the level of the utility is
with r=0.1, the level is
compared to C1 with r=0.1. Choose the reason for this change.
OC1 becomes cheaper.
OC2 becomes cheaper.
Opportunity cost of interest rate becomes smaller.
Please answer all parts of the question.
When the interest rate rises by 0.1, C2 changes by
◆
A representative
In an open economy
compared to C2 with r=0.1. C1 changes by
Transcribed Image Text:Ci and Yi are consumption and income at period i (i=1, 2). When the world interest rate is r (100xr%), C2= agent has the utility function U=C1C2. In an autarky economy, when Y1=100 and Y2=132, the level of the utility is with r=0.1, the level is compared to C1 with r=0.1. Choose the reason for this change. OC1 becomes cheaper. OC2 becomes cheaper. Opportunity cost of interest rate becomes smaller. Please answer all parts of the question. When the interest rate rises by 0.1, C2 changes by ◆ A representative In an open economy compared to C2 with r=0.1. C1 changes by
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