Question 1

Draw a two period budget line where the borrow/lending rate of interest,r,allows consumers to choose consumption in each of the two periods.C1 and C2 given their anticipated income on two periods,Y1 and Y2.The vertical (C2)intercept is

Accepted Answer

A)  $Y _ { 1 } + \frac { Y _ { 2 } } { 1 + r }$ 
B)  $\frac { Y _ { 1 } } { 1 + r } + Y _ { 2 }$ 
C)  $Y _ { 1 + } Y _ { 2 } ( 1 + r )$ 
D)  $Y _ { 1 } ( 1 + r ) + Y _ { 2 }$

Question 2

Accelerated depreciation laws may increase firms' investment in equipment because

Accepted Answer

A) machines will wear out more rapidly. 
B) profits will be increased. 
C) the rental rate on capital will be lowered. 
D) the price of machines will fall.

Question 3

Draw a two period budget line where the borrow/lending rate of interest,r,allows consumers to choose consumption in each of the two periods.C1 and C2 given their anticipated income on two periods,Y1 and Y2.The slope is

Accepted Answer

A) r 
B) -r 
C) 1 + r 
D) -(1 + r)

Question 4

Draw a two period budget line where the borrow/lending rate of interest,r,allows consumers to choose consumption in each of the two periods.C1 and C2 given their anticipated income on two periods,Y1 and Y2.The one point on the budget line not affected by the interest rate is

Accepted Answer

A)  $C _ { 1 } = Y _ { 1 } ; C _ { 2 } = Y _ { 2 }$ 
B) the horizontal intercept. 
C) the vertical intercept

Question 5

An increase in the corporate profits tax will most likely lead to

Accepted Answer

A) a decrease in the rental rate of capital in the corporate sector. 
B) no change in the rental rate of capital in the corporate sector. 
C) no change in the rental rate of capital in the non-corporate sector. 
D) an increase in the rental rate of capital in the corporate sector.

Question 6

Suppose a person's preferences are to "consumption smooth",which means they wish to get $C _ { 1 } = C _ { 2 }$ for all incomes and interest rates $Y _ { 1 } = Y _ { 2 }$ .For any interest rate and ,the person will ____ in the first period.

Accepted Answer

A) borrow 
B) save 
C) neither borrow nor save

Question 7

If real extraction costs do not change,the relative price of a finite resource would be expected to

Accepted Answer

A) fall over time. 
B) remain constant over time. 
C) rise at a rate given by the nominal rate of interest. 
D) rise at a rate given by the real rate of interest.

Question 8

Suppose Johnny Stroller sells 12,25,and 75 year-old scotch in under black,red,and blue labels.Suppose the storage costs are zero and the initial production costs are the same.What is the implied (approximate)interest rate if black sells for $12,red for $16 and blue for $44.

Accepted Answer

A) 2 
B) 5 
C) 8 
D) 10

Question 9

The two-period budget line for incomes Y1 and Y2 and consumption C1 and C2 can be written as $C _ { 2 } = Y _ { 1 } ( 1 + r ) + Y _ { 2 } - ( 1 + r ) C _ { 1 }$ ,if the interest rate were to rise the budget line would

Accepted Answer

A) shift to the left in a parallel fashion 
B) shift to the right in a parallel fashion 
C) rotate counter-clockwise pivoting on Y1,Y2 
D) rotate clockwise pivoting on Y1,Y2

Question 10

Draw a two period budget line where the borrow/lending rate of interest,r,allows consumers to choose consumption in each of the two periods.C1 and C2 given their anticipated income on two periods,Y1 and Y2.The horizontal (C1)intercept is

Accepted Answer

A)  $Y _ { 1 } + \frac { Y _ { 2 } } { 1 + r }$ 
B)  $\frac { Y _ { 1 } } { 1 + r } + Y _ { 2 }$ 
C)  $Y _ { 1 } + Y _ { 2 } ( 1 + r )$ 
D)  $Y _ { 1 } ( 1 + r ) + Y _ { 2 }$

Exam 14: Capital and Time

Draw a two period budget line where the borrow/lending rate of interest,r,allows consumers to choose consumption in each of the two periods.C1 and C2 given their anticipated income on two periods,Y1 and Y2.The vertical (C2) intercept is

Accelerated depreciation laws may increase firms' investment in equipment because

Draw a two period budget line where the borrow/lending rate of interest,r,allows consumers to choose consumption in each of the two periods.C₁ and C₂ given their anticipated income on two periods,Y₁and Y₂.The slope is

Draw a two period budget line where the borrow/lending rate of interest,r,allows consumers to choose consumption in each of the two periods.C1 and C2 given their anticipated income on two periods,Y1 and Y2.The one point on the budget line not affected by the interest rate is

An increase in the corporate profits tax will most likely lead to

Suppose a person's preferences are to "consumption smooth",which means they wish to get $C _ { 1 } = C _ { 2 }$ for all incomes and interest rates $Y _ { 1 } = Y _ { 2 }$ .For any interest rate and ,the person will ____ in the first period.

If real extraction costs do not change,the relative price of a finite resource would be expected to

Suppose Johnny Stroller sells 12,25,and 75 year-old scotch in under black,red,and blue labels.Suppose the storage costs are zero and the initial production costs are the same.What is the implied (approximate) interest rate if black sells for $12,red for $16 and blue for $44.

The two-period budget line for incomes Y1 and Y2 and consumption C1 and C2 can be written as $C _ { 2 } = Y _ { 1 } ( 1 + r ) + Y _ { 2 } - ( 1 + r ) C _ { 1 }$ ,if the interest rate were to rise the budget line would

Draw a two period budget line where the borrow/lending rate of interest,r,allows consumers to choose consumption in each of the two periods.C1 and C2 given their anticipated income on two periods,Y1 and Y2.The horizontal (C1) intercept is

Exam 14: Capital and Time

Draw a two period budget line where the borrow/lending rate of interest,r,allows consumers to choose consumption in each of the two periods.C1 and C2 given their anticipated income on two periods,Y1 and Y2.The vertical (C2) intercept is

Accelerated depreciation laws may increase firms' investment in equipment because

Draw a two period budget line where the borrow/lending rate of interest,r,allows consumers to choose consumption in each of the two periods.C1 and C2 given their anticipated income on two periods,Y1 and Y2.The slope is

Draw a two period budget line where the borrow/lending rate of interest,r,allows consumers to choose consumption in each of the two periods.C1 and C2 given their anticipated income on two periods,Y1 and Y2.The one point on the budget line not affected by the interest rate is

An increase in the corporate profits tax will most likely lead to

Suppose a person's preferences are to "consumption smooth",which means they wish to get C1=C2C _ { 1 } = C _ { 2 }C1​=C2​ for all incomes and interest rates Y1=Y2Y _ { 1 } = Y _ { 2 }Y1​=Y2​ .For any interest rate and ,the person will ____ in the first period.

If real extraction costs do not change,the relative price of a finite resource would be expected to

Suppose Johnny Stroller sells 12,25,and 75 year-old scotch in under black,red,and blue labels.Suppose the storage costs are zero and the initial production costs are the same.What is the implied (approximate) interest rate if black sells for $12,red for $16 and blue for $44.

The two-period budget line for incomes Y1 and Y2 and consumption C1 and C2 can be written as C2=Y1(1+r) +Y2−(1+r) C1C _ { 2 } = Y _ { 1 } ( 1 + r ) + Y _ { 2 } - ( 1 + r ) C _ { 1 }C2​=Y1​(1+r) +Y2​−(1+r) C1​ ,if the interest rate were to rise the budget line would

Draw a two period budget line where the borrow/lending rate of interest,r,allows consumers to choose consumption in each of the two periods.C1 and C2 given their anticipated income on two periods,Y1 and Y2.The horizontal (C1) intercept is

Draw a two period budget line where the borrow/lending rate of interest,r,allows consumers to choose consumption in each of the two periods.C₁ and C₂ given their anticipated income on two periods,Y₁and Y₂.The slope is

Suppose a person's preferences are to "consumption smooth",which means they wish to get $C _ { 1 } = C _ { 2 }$ for all incomes and interest rates $Y _ { 1 } = Y _ { 2 }$ .For any interest rate and ,the person will ____ in the first period.

The two-period budget line for incomes Y1 and Y2 and consumption C1 and C2 can be written as $C _ { 2 } = Y _ { 1 } ( 1 + r ) + Y _ { 2 } - ( 1 + r ) C _ { 1 }$ ,if the interest rate were to rise the budget line would