q1

The economic meaning of the government's intertemporal budget constraint is that: (a) the government must balance its budget each period (b) the government is not required to balance its budget, either now or at any time in the future (c) when the government's budget is in deficit, it must be in surplus at some times in the future so that in present value terms the budget is in balance (d) the government can borrow as much as its requires at any date (e) the same tax schedule is applied to every generation Question 2 The user cost of capital is and equals (a) the average cost of capital; the real interest rate (b) the cost of utilising an additional unit of capital; the real interest rate plus the depreciation rate less the rate of capital appreciation (c) the return on the stock market; the real interest rate plus a risk premium (d) the same as the marginal product of capital; the real interest rate (e) the variable cost of an investment good; the nominal interest rate