12 Suppose that a household in a two-period model has income of $30,000 in period 1 and...

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12 Suppose that a household in a two-period model has income of $30,000 in period 1 and $25,000 in period 2, and the interest rate is 75 percent.

Assume that the price of the good is $1 in both periods. Suppose that the household decides to consume 26,000 in period 1 and 32,000 in period 2.

Now suppose that the interest rate falls to 50 percent, and the household decides not to borrow or lend at all. Is the household better off or worse off with the higher interest rate?

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MandB 3

ISBN: 978-1285167978

3rd Edition

Authors: Dean Croushore

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Question Posted: Nov 13, 2024 01:00 AM

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12 Suppose that a household in a two-period model has income of $30,000 in period 1 and...

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MandB 3

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