question 1

If the cost of going to the ATM is $1 and the nominal interest rate is 5 percent, someone who has a 15 percent probability of having his cash lost or stolen and spends $10 each day will go to the ATM once every ____ days.

		10
		13
		16
		19

question 2

An economy has 100 households. The forty rich households each have incomes of $50,000 in period 1 and $75,000 in period 2. The sixty poor households each have incomes of $20,000 in period 1 and $25,000 in period 2. Assume that the price of the good is $1 in both periods. Suppose that each household decides that its consumption in period 1 will equal 50 percent of the present value of its income from both periods. The equilibrium real interest rate is about

		20 percent.
		30 percent.
		40 percent.
		50 percent.