This person earns $1000 of income today and $2000 income next year.Point C represents his consumption if he doesn't borrow or lend.If the interest rate is 10%, his Consumption Next Year at Point A is?ConsumptionNext YearAConsumption Today3,100B. This person earns $1000 of income today and $2000 income next year.Point C represents his consumption if he doesn't borrow or lend.If the interest rate is 10%, his Consumption This Year at Point B is?Round your answer to the nearest dollar.ConsumptionNext YearAВConsumption Today

The budget constraint for a two-period consumption is : [Ct+Ct+1/rt+1]=[Yt+Yt+1/rt+1] Ct is the…

Answered: This person earns $1000 of income today…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter17: Capital And Time

Section: Chapter Questions

Problem 17.3P

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Suppose an individual places his money in a bank for a year then invests in apples for a year. Suppose the bank has an annual rate of 5%, compounded continuously. During the year in which the individual's money is in the bank, the apple grows in price from $1 to $1.25. Suppose its return doubles in the second year, when the individual's money is invested in the apples. He starts the first investment period with $100. How much money does he have after two years following the investment plan given above? Group of answer choices $105.1 $124.7 $154.4 $157.7
The disposable income from your part-time job in 2019 was $18,800. In 2018, you borrowed $700 at 14 percent interest. You repaid your loan with interest in 2019. How much would you have available for spending in 2019? (Do not round intermediate calculations.)
Eva lives for two periods and wants to have equal consumption in both. Her first period income is $Y subscript 1 and her second period income is $Y subscript 2. The interest rate is 7%. If Y subscript 1 = 81713, and Y subscript Training 2 = 80175, what is her optimal saving?
assume elsa has current income of $50000 and expects income of $60000 next period. interest rate is 6% elsa desires to have the same amount of consumption expenditure during both periods. in the two period certainty framework, determine how much elsa's expenditures are during each period is elsa a saver or spender
George wants to retire at 65 with $1,000,000 in savings. He plans to deposit a lump sum on his birthday each year. How much will he need to invest each year if he starts saving at 25? 35? 45? Assume an interest rate of 6%
C = $400 + 0.9YD If disposable income = $5,000, then the value of consumption (C) is
You are saving up for a big investment in six years. You estimate it will take $14,500 to secure this investment. How much do you need to put into a savings account at the end of each year if the savings account earns 4%? Neglect taxes.
Assume a consumer who has current period income y = 200 , future-period income y' = 150, current and future taxes t = 40 and t' = 50, respectively and faces a market real interest rate ofr 005, or 5% per period. The consumer would like to consume equal amounts in both periods, that is, he or she would like to set c = c', if possible. However, this consumer is a faced with a credit market imperfections, in that he or she cannot borrow at all, that is, s>or=20. (a) Show the consumer's lifetime budget constraint and indifference curves in a diagram. (b) Calculate his or her optimal current period and future-period consumption and optimal, saving, and show this in your diagram.
Assume a consumer who has current period income y = 200 , future-period income y' = 150, current and future taxes t = 40 and t' = 50, respectively and faces a market real interest rate ofr 005, or 5% per period. The consumer would like to consume equal amounts in both periods, that is, he or she would like to set c = c', if possible. However, this consumer is a faced with a credit market imperfections, in that he or she cannot borrow at all, that is, s>or=20. (a) Show the consumer's lifetime budget constraint and indifference curves in a diagram. Calculate his or her optimal current period and future-period consumption and optimal, saving, and show this in your diagram. (b) Suppose that everything remains unchanged. except that now t = 20 and t' = 71. Calculate the effects on current and future con sumption and optimal saving, and show this in your diagram (d) Now, suppose alternatively that y = 100. Repeat parts (a) and (b), and explain any differences.
A consumer's income in the current period is y = 100 and income in the future period is y'= 120. He or she pays lump-sum taxes t=20 in the current period and t'= 10 in the future period. The real interest rate is 0.1, or 10%, per period. (a) Determine what the consumer's optimal current-period and future-period consump tions are, and what optimal saving is, and show this in a diagram with the consumer's budget constraint and indifference curves. Is the consumer a lender or a borrower? (b) Now suppose that instead of y = 100 the consumer has y = 140 Again, determine optimal consumption in the current and future periods and optimal saving, and show this in a dia gram. Is the consumer a lender or a borrower? (c) Explain the differences in your results be tween parts (a) and (b).
APPLIED ECONOMICS Topic: Intertemporal Choice Levinn’s utility function is expressed as the following: U= C1 C2 0.3 where C1 is his first periodconsumption and C2 is his second period consumption. His income in the first period is$2500 and interest rate is at 10%. If at equilibrium, Levinn is neither a borrower nor a lender,then what is his expected income in the second period? Do not copy from others
Describe the procedure that outlines the steps for determining the IRR for a mixed investment?

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This person earns $1000 of income today and $2000 income next year. Point C represents his consumption if he doesn't borrow or lend. If the interest rate is 10%, his Consumption Next Year at Point A is? Consumption Next Year A B Consumption Today