Description of this paper

WEEK 7: EXERCISE 12, chap 13 - Suppose that a household in a two-period model

Description

solution


Question

Question;WEEK 7: EXERCISE 12, chap 13Suppose that a household in a two-period model has income of $30,000 in period 1 and $25,000 in period 2, and the interest rate is 75 percent. Assume that the price of the good is $1 in both periods. Suppose that the household decides to consume 26,000 in period 1 and $32,000 in period 2. Now suppose that interest rate falls to 50 percent, and the household decides not to borrow or lend at all. Is the household better off or worse off with the higher interest rate?

 

Paper#51816 | Written in 18-Jul-2015

Price : $22
SiteLock