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A:
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- Name the two components of budget in an economyCourse: Introduction to Microeconomics Topic: Intertemporal Consumption DecisionsA consumer makes decision to consume in this year and next year. This year she has an income of M1 = $ 1.5 million and next year her income will be M2 = $ 2.75 million. Interest rate is 10%. Her intertemporal preferences are represented by function U(c1, c2) = c1*c2, whose intertemporal marginal rate of substitution is IMRS = c2/c1.a) Find and graph Budget Constraintb) Find and graph optimal consumption basket and indicate whether the consumer SAVES or BORROWS in the FIRST YEAR.c) Indicate whether following statement is true or false: "Any increase in interest rate will cause a decrease in consumer's welfare" Justify.d) If next year's income is maintained, how much would this year's income have to be for consumer to neither save nor borrow money at 10% interest rate?e) How much would interest rate have to be for consumer to consume exactly her initial endowment (M1 = $ 1.5 million and M2 = $ 2.75…Smith consumes all his income. Draw his consumption and saving schedule.
- If Evan's income is reduced to zero after he loses his job, his consumption will be ________ and his saving will be ________. a.greater than zero; less than zero b.greater than zero; greater than zero c.less than zero; greater than zero d.less than zero; less than zeroRefer to the information provided in Table Below to answer the questions that follow Y C S 0 50 -50 50 60 -10 75 65 10 100 70 30 120 74 46 140 78 62 160 82 78 1- If the Consumption Function is C= 50+0.2Y 2- Find the consumption and the saving for this economy. 3- Illustrate by graph the consumption function.Hello. can you please assist on the following question below Q.1 Use a diagram to explain the three main characteristics of the consumptionfunction.
- Explain how does adecrease in the current income y affect the consumer’s consumption-saving decision. In particular,explain: 1) How will current consumption c, future consumption c', and savings s change; 2) Arethere any substitution effect or income effect. Make sure you draw two figures, one for the borrowersand one for the lenders.Explain how does adecrease in the current income y affect the consumer’s consumption-saving decision. In particular,explain: 1) How will current consumption c, future consumption c′, and savings s change; 2) Arethere any substitution effect or income effect. Make sure you draw two figures, one for the borrowersand one for the lendersno chagpt answer urgent. The marginal rate of substitution of current consumption for future consumption is A) the slope of the indifference curve. B) minus the slope of the difference curve. C) the downward slope of the budget constraint. D) the endowment point. E) the slope of the lifetime budget constraint.
- 6. Given the savings function S = (3Y2 +2Y)/ ( Y-1) a) Write the consumption function. b) Find the equilibrium level of income, if the consumption is 100. Please answer both subparts. I will really upvoteMICROECONOMICS Clara is leaving for the university restaurant with 3000 HUF in her pocket. Clara is only interested in two things; grilled chicken (x) and salad (y). One slice of grilled chicken costs 300 HUF and the price of 100 grams of salad is 500 HUF. What is the slope of Clara's budget line assuming that she spends her entire budget on these two items and she measures her consumption of grilled chicken on the horizontal axis and salad on the vertical one? (Please use two decimals in your answer.)Suppose you have a monthly income of $1000, $850 in monthly expenses, and you can put money in a savings account that yields a monthly interest rate of 4%. Create a budget constraint showing the trade-off between present consumption (horizontal axis) and future consumption (vertical axis). How much will you have in the future if you choose to consume $850 now? Show this point on your budget constraint.