You live 2 periods. You are born with nothing and you must die with nothing. In period 1 you have labor income of Li1. In period 2 you have labor income of Li2 You may consume (C1 and C2) as well as buy or sell bonds (B). Asume Labor of L1 = 20 & L2 = 220. The interest rate is 10%. Finally assume people want to smooth consumption so C1 = C2. How much do people consume in each period? How much do people consume in each period? 81. 82. 83. What is the value of B 84. 85. 86.

You live 2 periods. You are born with nothing and you must die with nothing. In period 1 you have labor income of Li1. In period 2 you have labor income of Li2 You may consume (C1 and C2) as well as buy or sell bonds (B). Asume Labor of L1 = 20 & L2 = 220. The interest rate is 10%. Finally assume people want to smooth consumption so C1 = C2. How much do people consume in each period? How much do people consume in each period? 81. 82. 83. What is the value of B 84. 85. 86.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter17: Capital And Time

Section: Chapter Questions

Problem 17.2P

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