Please help with #9 a and b. For question 2 i found that p2 = $0.9417 in the market clearing equation, for question 7, the equilibrium interest rate was 11.98% and for question 8, there was no equilibrium interest rate. Thank you!! 9. Begin from the baseline preferences and endowments. A. A third person named Zena joins our economy. Zena is very impatient with utility function 0.80 In (C₁) +0.20 In (C₂). However, Zena has no endowment and hence no wealth. Incorporate Zena into the market clearing equation and determine the equilibrium interest rate. [= J % B. Explain the relationship between the interest rate in this case and what you calculated from questions 2,7, and 8. Write at least five sentences.
Please help with #9 a and b. For question 2 i found that p2 = $0.9417 in the market clearing equation, for question 7, the equilibrium interest rate was 11.98% and for question 8, there was no equilibrium interest rate. Thank you!! 9. Begin from the baseline preferences and endowments. A. A third person named Zena joins our economy. Zena is very impatient with utility function 0.80 In (C₁) +0.20 In (C₂). However, Zena has no endowment and hence no wealth. Incorporate Zena into the market clearing equation and determine the equilibrium interest rate. [= J % B. Explain the relationship between the interest rate in this case and what you calculated from questions 2,7, and 8. Write at least five sentences.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:Please help with #9 a and b. For question 2 i found that p2 = $0.9417 in the market clearing equation, for
question 7, the equilibrium interest rate was 11.98% and for question 8, there was no equilibrium interest
rate. Thank you!!
9. Begin from the baseline preferences and endowments.
A. A third person named Zena joins our economy. Zena is very impatient with utility function
0.80 In (C₁) +0.20 In (C₂).
However, Zena has no endowment and hence no wealth.
Incorporate Zena into the market clearing equation and determine the equilibrium interest
rate.
[=
J
%
B. Explain the relationship between the interest rate in this case and what you calculated from
questions 2,7, and 8. Write at least five sentences.
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