How do changes in interest rate affect expected consumption? Interprete the effect of interest rate on expected consumption in the light of precautionary saving
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How do changes in interest rate affect expected consumption? Interprete the effect of interest rate on expected consumption in the light of precautionary savings.
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- Which of the following is a major factor in determining an individual's supply of savings? A: Patience B: Investment C: GDPThe future value of a dollar as the interest rate increases and the longer the money remains invested Select one: a. decreases; increases b. decreases; decreases c. increases; increases 21 d. increases; decreasesThe future value of a dollar as the interest rate increases and the longer the money remains invested Select one: a. increases; decreases b. increases; increases c. decreases; increases d. decreases; decreases
- You're currently 20 years old, anticipate a natural life of 80 years and a work life of 40 years (retire at the age of 60). You estimate your income from work will be $4,500,000. a. What is your level of permanent consumption? b. What is the level of savings you will have when you retire? c. If at the age of 45 you receive a bonus of $100,000, how will this impact your permanent consumption? Over what time period.This person earns $1000 of income today and $2000 income next year. Point C represents his consumption if he doesn't borrow or lend. If the interest rate is 10%, his Consumption This Year at Point B is? Round your answer to the nearest dollar. Consumption Next YearThis person earns $1000 of income today and $2000 income next year. Point C represents his consumption if he doesn't borrow or lend. If the interest rate is 10%, his Consumption Next Year at Point A is? Consumption Next Year B Consumption Today
- This person earns $1000 of income today and $2000 income next year. Point C represents his consumption if he doesn't borrow or lend. If the interest rate is 10%, his Consumption Next Year at Point A is? Consumption Next Year A Consumption Today 3,100 B.If the default premium decreases, what is the effect on the consumption and savings of an individual consumer? If the default premium decreases, the individual consumer will her consumption and will her savings.How does savings change with changes in q? Provide some intuition behind this result.
- Optimizing economic agents use the real interest rate when thinking about the economic costs and returns of a loan. Suppose the average rate paid by banks on savings accounts is 0.80% at a time when inflation is around 1.95%. For the average saver, the real rate of interest on his or her savings is ___%.You take $100 from your bank and spend all of it at A's store. A spends 90% of the 100$ at B's store. B spends 90% of that value (about $81, if you are curious) at C's store. C spends 90% of that value (about $72s if your are curious at D's store. Who spends 90% of that at.....so eventually this spending will come to an end. At the end of all this, how much spending happened? (If you try to solve this by adding up all the spending you are in for a long evening)Why do we use the present value of an asset or investment as basis for its value?