Course: Microeconomics - Intertemporal Consumption Decisions Consider a person who consumes in the 2 periods (C1 and C2), but ONLY works and earns an income in the first period (C1). Assume that consumption in each period behaves as a normal good. a) What is the effect of a rise in income on welfare? And on consumption in both periods? GRAPH b) What is the effect of a rise in the interest rate (assume that r goes from 10% to 15%) that occurs before the consumption decisions on welfare? GRAPH and on consumption in both periods?) GRAPH

Course: Microeconomics - Intertemporal Consumption Decisions Consider a person who consumes in the 2 periods (C1 and C2), but ONLY works and earns an income in the first period (C1). Assume that consumption in each period behaves as a normal good. a) What is the effect of a rise in income on welfare? And on consumption in both periods? GRAPH b) What is the effect of a rise in the interest rate (assume that r goes from 10% to 15%) that occurs before the consumption decisions on welfare? GRAPH and on consumption in both periods?) GRAPH

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter7: Production And Growth

Section: Chapter Questions

Problem 5CQQ

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