1.Suppose a bank will pay you a 10% interest rate on your deposits for 1 period. In this case you must sacrifice $10 of current consumption to finance

$9 of future consumption.

$10 of future consumption.

$11 of future consumption.

$1 of future consumption.

2.One thousand dollars given to you a year from now is worth __________ to you today if the relevant discount rate is 10%.

$1,000

$1,100

$909

$900

3.If the demand function for apples is P = 10 - Q, how much consumer surplus does the consumer gain when the price of the apples equals 5?

25

5

20

12.5

4.You have $20,000 of current income and $45,000 of future income. The interest rate between the current and future period is 2 percent. What is the maximum amount you could consume in the future?

65,400

69,000

20,400

65,000

5.You have $20,000 of current income and $45,000 of future income. The interest rate between the current and future period is 2 percent. When you allocate consumption optimally between the two periods the marginal rate of time preference between the two periods is

-1.02.

-1.00.

-1.80.

0.80.