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- What is Time Consistency? Select one: a. None of the above b. a situation in which an agent, planner or objective maximizer must make a choice about an action or decision in a future plan which is optimal at a later date but is not optimal initially c. Refers to a situation in which a policy results in varying results d. a situation in which an agent, planner or objective maximizer must make a choice about an action or decision in a future plan which is optimal initially but is no longer optimal at a later dateA decrease in people's disposable income OA. increases investment demand. B. increases consumption. OC. decreases saving. O D. increases saving and decrease consumption. OE. increases saving. Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism.Answer completely and accurate answer.Rest assured, you will receive an upvote if the answer is accurate.Consider a finance economy with two states with probabilities pi1=1/3 pi2=2/3. Both agents have utility of income v(w)=ln(w). Current consumption does not enter agents expected utilities; they are interested only in consumption tomorrow. The agents receive endowments of wealth tomorrow. In state 1 agent A will get 6 units of wealth, in state 2 he will receive 3 units. Agent B will get 6 units of wealth in both both/either state. - Compute the equilibrium prices of wealth, (Arrow security prices), and the equilibrium allocations of wealth for Agents A and B... Hint:you need to set up the optimisation problem for each agent, solve for the demands for contingent wealth, impose market clearing conditions and solve for the equilibrium prices of wealth in different states (or their ratio).
- please solve it completely. Bob has preferences over consumption in period 0 and 1 of the form U(x, y) = xy, where x and y are Bob's consumption in period 0 and 1 respectively. He has $15,000 in the bank now and is trying to decide between two different investment opportunities, A and B. A: invest $10,000 in period 0 and receive $20,000 in period 1. B: invest $2,000 in period 0 and receive $6,000 in period 1. If Bob can borrow and lend at a rate of interest of 50 percent, which investment opportunity will he choose? Given your answer in (a), how much will he consume in each period if the price of the good is $1 in both periods? Given your answer in (a), how much will he consume in each period if the price in period 0 is $1 and the inflation is 20%? Assuming that the price of consumption is $1 in both periods and the borrowing rate is 50% and the lending rate is 100%. Given your answer in (a), how much will he consume in each period?please only do: if you can teach explain steps of how to solve each part of formula ? x(p,w)={(2w/3p1,w/3p1) if p1<p2(2w/3p1,w/3p2) if p1≥p2 ? how to solve for thisSuppose that the economy of country 1 is characterized by the following behavioral equations: Variable Equation Consumption C=1234 +0.5 YD Investments I=1000 + 0.1 Y Government expenditures G= 100 Net exports Nx= 300-0.2 Y Where Y denotes the real GDP and YD denotes the disposable income (YD= Y-T). Suppose that the output gap in country is measured as -15000. What should be increase in government expenditure in order to close the gap and make the economy to reach its potential level of GDP?.
- Amy is figuring out her budget for two periods, t∈1,2 . In each period, she has an income yt with y1=200 and y2=0 . ct denotes her consumption level at period t . Amy decides to spend half of her first period income immediately, so c1=100 , and invest the other half ( $100 ). Amy has two investment options. One option is to buy stocks from company B . Each share costs $1 at t=1 . At t=2, the stock price is uncertain. There is a 10 % chance the stock price increases to $4 per share, a 50 % chance the stock price increases to $2.25 per share, and a 40 % chance the company B goes bankrupt and the stock price falls to $0 per share. Amy's other option is to invest all $100 in a savings account. But at t=2 , there is also a random shock to the savings account. There is a 50 % chance the bank operates normally and the interest rate is r=44 % and a 50 % chance the interest rate falls to 0 (but Amy can still get her $100 principal back). 1. Assume without proof that at t=1 , she still consumes…Amy is figuring out her budget for two periods, t∈1,2 . In each period, she has an income yt with y1=200 and y2=0 . ct denotes her consumption level at period t . Amy decides to spend half of her first period income immediately, so c1=100 , and invest the other half ( $100 ). Amy has two investment options. One option is to buy stocks from company B . Each share costs $1 at t=1 . At t=2, the stock price is uncertain. There is a 10 % chance the stock price increases to $4 per share, a 50 % chance the stock price increases to $2.25 per share, and a 40 % chance the company B goes bankrupt and the stock price falls to $0 per share. Amy's other option is to invest all $100 in a savings account. But at t=2 , there is also a random shock to the savings account. There is a 50 % chance the bank operates normally and the interest rate is r=44 % and a 50 % chance the interest rate falls to 0 (but Amy can still get her $100 principal back). 1. If Amy invests $ 100 in stocks at t=1 , what is the…Suppose that a consumer/investor has an initial endowment only for the current period, which is Eo =450. She may consume today or in the next period only (two-period model). The interest rate for borrowing and lending in the capital market is 5% (a)Depict the budget constraint for the investor in an inter-temporal consumption diagram! What is the maximum amount the consumer is able to consume in the next period? (b)The consumption preferences of the consumer/investor are best described by a square root function, defined over current and future consumption. What is his optimal consumption plan? Show your calculations! Depict the results in appropriate diagram. Which amount is invested in the capital market?
- an entrepreneur is setting up a storage facility which will provide storage bothat peak times and off peak times.The entrepreneur need to decide how much money storage Q1 t to supply at peak times, and how much storage Q2 to supply off peakit also needs to decide how to set up capacity K, where capacity is such that both K is equal or plus Q1 and K is equal or plus Q2The peak period demand fan storage is given by PI=7200 -Q1 and the off peak is give by P2=5400 -Q2 where P1 and P2 are the prices for units of storage at peak times and off peak respectively.the variable cost is 200 per unit of storage supplied and capacity costs are 100 per unit. Hence profits fpr the entrepreneurs are given by:(7200-Q1) Q1+ (5400-Q2) Q2 - 200 (Q1+Q2)-100 K where Q1 is less or equal K and Q2 is less or equal Ka) write down the Kuhn-Tucken conditions for this proble. b) Find the optimal outputs and capacity for this problemc) now suppose there is a substancial increqse in capacity costs, which rise to 2000…The COVID-19 pandemic has substantially affected the Canadian economy in several dimensions.As the Canadian governments, both federal and provincial, have issued various forms of “stay home”instructions, workers have to work from home. Working from home has two effects: firms are nowless productive and hence the current TFP z declines; labor supply N s(r) declines. In addition,consumers can only go grocery once a week and hence consumption demand Cd(r) declines for anylevel of interest rate and income. Answer the following question. Use a real business cycle model that we studied in Chapter 13 to analyze theimpact of Covid-19 in terms of output, employment, consumption, investment, wage, interestrate, money demand, and price. Make sure you show three figures: A figure illustratingthe goods market, a figure illustrating the labor market, and a figure illustrating the moneymarket. (In this question we assume that the change in output supply dominates the changein output demand, and the…You must have learned that we cannot be always rational decision maker. Now, Tell us specifically about your experience when you made a nonrational decision making. How does this decision-making align with the satisfying model and the intuition model? (Show an example for both models) Satisficing model Intuition model