MANKIW: PRINCIPLES OF MACROECONOMICS
8th Edition
ISBN: 9781337801782
Author: Mankiw
Publisher: CENGAGE L
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Chapter 11, Problem 5QR
To determine
Real and nominal interest rate and its relation.
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and u (C1, C2)
=
1/2
=
f) Derive analytically and show graphically the solution under other util-
ity functions such as u (C1, C2) ac₁+bc2 where a, b > 0, u (C1, C2) = ac₁+bc1/2
acbc2 (assume that the agent is sufficiently rich to
avoid the corner solution). What of these utility functions reflects best your
own preferences (or indicate other utility function that represent your pref-
erences).
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MANKIW: PRINCIPLES OF MACROECONOMICS
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