Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Both answers for Qs are correct. I need help finding the answers for r, C1, and C2, please. I already know that NONE of the

Both answers for Qs are correct. I need help finding the answers for r, C1, and C2, please. I already know that NONE of the answers are 0, r is NOT 100, C1 is NOT 10, and C2 is NOT 20. Thank you!

image text in transcribed

Problem Set due Dec 7, 2021 18:30 EST Problem PS9.2.1 V1 point (graded Suppose that there are only 10 individuals in the economy each with the following utility function over present and future consumption: U (1,0) = 0+where is consumption today, and is consumption tomorrow. Consumption tomorrow is less valued because people are impatient and prefer consuming now rather than later. Buying 1 unit of consumption today costs $1 today and buying 1 unit of consumption tomorrow costs $1 tomorrow. All individuals have income of 10 dollars today and no income tomorrow (because they will be retired) but they can save at the market interest rate 20. Suppose that in this economy all the funds for capital come from savings by the 10 individuals. Firms demand for capital is given by Qp = 100 - 100r. What is the market supply for funds if the interest rate is 30%? Qs 0 0 What is the market supply for funds if the interest rate is 70%? Qs 100 100 What is the equilibrium interest rate that clears the capital market? What is aggregate consumption in each period at that interest rate? G- Problem Set due Dec 7, 2021 18:30 EST Problem PS9.2.1 V1 point (graded Suppose that there are only 10 individuals in the economy each with the following utility function over present and future consumption: U (1,0) = 0+where is consumption today, and is consumption tomorrow. Consumption tomorrow is less valued because people are impatient and prefer consuming now rather than later. Buying 1 unit of consumption today costs $1 today and buying 1 unit of consumption tomorrow costs $1 tomorrow. All individuals have income of 10 dollars today and no income tomorrow (because they will be retired) but they can save at the market interest rate 20. Suppose that in this economy all the funds for capital come from savings by the 10 individuals. Firms demand for capital is given by Qp = 100 - 100r. What is the market supply for funds if the interest rate is 30%? Qs 0 0 What is the market supply for funds if the interest rate is 70%? Qs 100 100 What is the equilibrium interest rate that clears the capital market? What is aggregate consumption in each period at that interest rate? G

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Modern Advanced Accounting In Canada

Authors: Hilton Murray, Herauf Darrell

7th Edition

1259066487, 978-1259066481

Students also viewed these Accounting questions