Consider the following two-period consumption-saving model: Max C (BC2)}, C1,C2 subject to the following constraints Y1 =C1+S, Y2 = C2 - (1+r)S. 1. Solve for the intertemporal budget constraint 2. Draw the budget constraint (in a graph) with Y1 = 140, Y2 = 70, and r = 0.25. Be sure to label the maximum values of C1 and C2 on the y-axis and x-axis. 3. Suppose that ß = 0.8, solve for the optimal values of consumption, C† and C;. 4. Compare your consumption function for period 1 to a consumption function suggested by John Maynard Keynes (the so-called Keynesian consumption function). Are they different? 5. When r does down, how does C1 change? Does it increase or decrease? Show this mathe- matically. 6. Compute the marginal propensity to consume in period 1. Does this fall in the range sug- gested by Keynes?

Consider the following two-period consumption-saving model: Max C (BC2)}, C1,C2 subject to the following constraints Y1 =C1+S, Y2 = C2 - (1+r)S. 1. Solve for the intertemporal budget constraint 2. Draw the budget constraint (in a graph) with Y1 = 140, Y2 = 70, and r = 0.25. Be sure to label the maximum values of C1 and C2 on the y-axis and x-axis. 3. Suppose that ß = 0.8, solve for the optimal values of consumption, C† and C;. 4. Compare your consumption function for period 1 to a consumption function suggested by John Maynard Keynes (the so-called Keynesian consumption function). Are they different? 5. When r does down, how does C1 change? Does it increase or decrease? Show this mathe- matically. 6. Compute the marginal propensity to consume in period 1. Does this fall in the range sug- gested by Keynes?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Calculate the simple interest due on a 58-day loan of $1300 if the interest rate is 5%. (Round your answer to the nearest cent.)$
Subject - advanced math Frank's loan pay off is to be made in two installments: $2500 in a year, and $3500 in 3 ½year. After talking to his loan officer, it was decided that he could pay both installments in 20months. How much would he pay if his loan is processed at 7 ¼ simple interest. Draw a timelineto illustrate your solution.
Calculate the table factor, the finance charge, and the monthly payment (in $) for the loan by using the APR table, Table 13-1. (Round your answers to the nearest cent.) AmountFinanced Number ofPayments APR TableFactor FinanceCharge MonthlyPayment $700 18 16% $ $ $
Calculate Savings when income is $2000 and APS is 0.62
You deposit $ 9,030 in an account that pays 3 % simple interest. How much do you have after 4 years? If needed, round your answer to zero decimal places.
If you wish to be a millionnaire at 35 years old, and 5% interest was paid annually, how much should you put into your savings account now?
$200 is not the correct answer. Please credit my account for the wrong answer provided.
What are the three different ways to compute interest charges?
please answer all parts of the questions within 30 minutes. make sure all the parts of the question are answered else i will give negative ratings.
What does the income statement summarize?