Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
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Question
Chapter 4, Problem 8NP
a)
To determine
The consumer’s PVLR.
b)
To determine
The equation for the consumer’s budget constraint and graph the budget line.
c)
To determine
The saving and consumption in the current period.
d)
To determine
The change in saving and consumption when current income increases by 11.
e)
To determine
The change in saving and consumption when future income increases by 11.
f)
To determine
The change in saving and consumption when initial wealth increases by 11.
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Students have asked these similar questions
Suppose that
y =100 (income today)
• y' = 150 (income tomorrow)
10% (interest rate on bonds)
%3D
r =
• t = 10 (taxes today)
• t' = 10 (taxes tomorrow)
Suppose that c = 100. Is the consumer borrowing or saving, today? And what will her budget constraint look tomorrow?
The consumer is borrowing.
Her budget constraint tomorrow will be
c' = 150 -10 - 10*(1.1) = 129
The consumer is saving.
Her budget constraint tomorrow will be
c' = 150 -10 + 10*(1.1) = 151
O The consumer is neither borrowing nor saving - she is breaking even.
Her budget constraint tomorrow will be
c' = 150 -10 = 140
O The consumer is saving.
Her budget constraint tomorrow will be
c' = 150 + 10*(1.1) = 161
%D
assume you are given a $100 raise, and
decide to save $20 of that money. also
assume that if you make zero income in a
year, you will still spend $7000.
a.) what is your consumption function?
b.) if you earn $20000 in a year how much will
you spend?
c.) will you be able to save while earning the
above income?
QUESTION 1An individual lives for two periods and decides how much to consume in each period.- In the first period his consumption equals C1 and his income Y1 = 200- In the second period his consumption equals C2 and his income Y2 = 100He can save or borrow money in the first period to finance his consumption in the second period.The interest rate he gets in case he saves or has to pay in case he borrows money equals 7%.Determine the budget constraint of this individual.
C2 = −0.935·C1 +314C2 =−1.07·C1 +314C2 =−0.8·C1 +314C2 =−1.08·C1 +314
QUESTION 2The total production of a good y is determined by the production function y = 3L2/3K1/3, where L is labour input and K capital input.The reward (factor prices) for labour and capital are, l = 27 en r = 2, respectively.The producer needs to produce 9000 units of good y.How much units of labour will he hire if he wants to miminize his total costs?
1587,4839,953000515,23
QUESTION 3A good is traded on a perfectly competitive…
Chapter 4 Solutions
Macroeconomics
Ch. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 8RQCh. 4 - Prob. 9RQCh. 4 - Prob. 10RQ
Ch. 4 - Prob. 1NPCh. 4 - Prob. 2NPCh. 4 - Prob. 3NPCh. 4 - Prob. 4NPCh. 4 - Prob. 5NPCh. 4 - Prob. 6NPCh. 4 - Prob. 7NPCh. 4 - Prob. 8NPCh. 4 - Prob. 9NPCh. 4 - Prob. 1APCh. 4 - Prob. 2APCh. 4 - Prob. 3APCh. 4 - Prob. 4APCh. 4 - Prob. 5APCh. 4 - Prob. 6APCh. 4 - Prob. 7APCh. 4 - Prob. 5WWMDCh. 4 - Prob. 6WWMD
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