QUESTION 15

1. In the two-period model of the economy, which of the following is true regarding the real interest rate?
2. A.Giving up one unit of current consumption goods increases future consumption goods by1/(1+r) units.
3. B.The slope of the lifetime budget constraint equals -1/(1+r).
4. C.1/(1+r) is the relative price of future consumption goods in terms of current consumption goods.
5. D.1/(1+r) is the relative price of current consumption goods in terms of future consumption goods.

2 points

QUESTION 16

1. In the two-period model of the economy, the optimal bundle (c,c') of a consumer satisfies which of the following?
2. A.MRS_c,c'=1+r.
3. B.c'=ac,wherea>0.
4. C.MRS_c,c'=1/(1+r).
5. D.MRS_c,c'=c'/(ac), wherea>0.