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Could you please explain Question 4 and 5? The answers in red are correct. 4. Which of the following is NOT true assuming the price
Could you please explain Question 4 and 5? The answers in red are correct.
4. Which of the following is NOT true assuming the price level remains constant? a. You would prefer $700 today over investing $500 for two years at an interest rate of 10% b. You would prefer to invest $200 today for two years at an interest rate of 9% over investing $200 today for three years at an interest rate of 5% c. You would prefer to invest $100 at an interest rate of 1% for twenty years over investing $95 today at an interest rate of 3% for fourteen years 5. The government announces that a new income tax will take effect in the next period a. You will decrease consumption by the amount of the tax in this period b. You will decrease consumption by less than the amount of the tax in this period c. You will decrease consumption by the amount of the tax in the next period d. You will decrease consumption by less than the amount of the tax in the next period 4. Which of the following is NOT true assuming the price level remains constant? a. You would prefer $700 today over investing $500 for two years at an interest rate of 10% b. You would prefer to invest $200 today for two years at an interest rate of 9% over investing $200 today for three years at an interest rate of 5% c. You would prefer to invest $100 at an interest rate of 1% for twenty years over investing $95 today at an interest rate of 3% for fourteen years 5. The government announces that a new income tax will take effect in the next period a. You will decrease consumption by the amount of the tax in this period b. You will decrease consumption by less than the amount of the tax in this period c. You will decrease consumption by the amount of the tax in the next period d. You will decrease consumption by less than the amount of the tax in the next periodStep by Step Solution
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