23. When an individual is considering borrowing to smooth consumption they will borrow just enough that A. B. C. D. فن the interest rate is less than their discount rate. they can consume equal amounts now and later. they can easily pay back the loan. the discount rate is equal to the interest rate.

Explain how does adecrease in the current income y affect the consumer’s consumption-saving decision. In particular,explain: 1) How will current consumption c, future consumption c′, and savings s change; 2) Arethere any substitution effect or income effect. Make sure you draw two figures, one for the borrowersand one for the lenders

Edna is living in a retirement home where home where most of her needs are taken care of, but she has some discretionary spending. Based on the basket of goods in Table 22.5, by what percentage does Ednas cost of living increase between time 1 and time 2

Jason spends his entire budget on coffee and doughnuts. You have the following data on his choices: Table 1: Jason's consumption choice and budget Price / cup of coffee Price / doughnut cups purchased doughnuts purchased Income February 2 1 4 22 March 5/2 3/4 10 8 31 April 3 1/2 8 14 31 Assume Jason 's preferences are monotone, the same over the three months, and that he has no way to save or borrow across periods. Are Jason's choices consistent with utility maximization?

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Draw and explain a graph for a two-period consumer. Include the budget line, indifference curve, utility maximization, and all labels. a.     Draw the effect of an increase in the interest rate. Show graphically and explain the effect on the level of consumption C1 and C2. b.     Why would C1 change? Explain c.      Why would C2 change? Explain

Name the two components of budget in an economy

1. Complete the following table and answer the questions below: Units consumed Total utility Marginal utility 1 10 10 2 8. 25 4 30 5 6. 34 2. Columns 1 through 4 in the table below show the marginal utility, measured in utils, that Ricardo would get by purchasing various amounts of products A, B, C, and D. Column 5 shows the marginal utility Ricardo gets from saving. Assume that the prices of A, B, C, and D are P18, 6, 4, and 24, respectively, and that Ricardo has an income of 106. Column 1 Column 2 Column 3 Column 4 Column 5 Unit Unit Unit Unit No. of MU MU MU MU P saved MU of A of B of C of D || || || || | 1 72 1 24 1 15 1 36 1 2 54 2 15 12 2 30 2 3 45 3 12 8 3 24 3 36 4 18 2 27 5 7 5 13 5 1 18 6. 7 6. 1/2 7 15 7 7 3.5 7 4 7 1/4 8 12 8. 1 8 2 8. 1/8 a. What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility? b. How many pesos will Ricardo choose to save?

2) Fred has income of $100,000 this year and $120,000 next year. Fred can borrow at an interest rate of 8% or lend at an interest rate of 2%. Draw Fred's budget constraint between spending this year and spending next year labeling all significant points.

hich theory of consumption best explains the consumption behavior of consumers of our economy? Question No: 02 [Marks: 10] If the State Bank started printing large quantities of Pakistani Rupees (Rs), what would happen to the number of Pakistani Rupees a dollar could buy? Why? Question No: 03 [Marks: 10] Deseribe the difference batuuean foreian diract investmet and foraion nortfolie invastment Who is mora likelu to