Question
Crusoe begins with an endowment A. Point R is the
consumption combination he would choose at real interest rate r and point R´ is the consumption combination he would choose at real interest rate r´. Which of the following statements is true?Solution
Crusoe's wealth has decreased because of the change in the real interest rate. Because Crusoe's endowment and preferences are such that he is a borrower, the increase in the interest rate hurts him. Note the MRS = 1+r at point R.
In the question below, a sentence is given, divided into five parts (A) , (B) , (C) , (D) and (E) . One of the parts is grammatically incorrect or has ...
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Read the given sentence to find out whether there will be error in any of the two parts, mark the parts in which there will be error as answer from the ...
