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134A06M1

# 134A06M1 - Name Perm ECON 134A MIDTERM EXAM 1 Please use...

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Name: Perm: ECON 134A MIDTERM EXAM 1 July 11, 2006 Please use your scantron to answer the multiple-choice questions from 1 – 9. There is only one correct answer for each multiple-choice question, which is worth 7 pts each. For Question 10 – 12, please write down your answers on this exam. 1. An individual with no investment opportunities has income of \$15,000 in period 0 and income of \$10,000 in period 1. If the interest rate is 7%, which of the following is on the individual’s consumption possibility line? A. \$3,000 in period 0 and \$21,215 in period 1. B. \$4,000 in period 0 and \$21,116 in period 1. C. \$10,000 in period 0 and \$15,350 in period 1. D. \$16,000 in period 0 and \$9,000 in period 1. E. \$18,800 in period 0 and \$6,200 in period 1. 2. Charles Carr borrowed \$3,500 to consolidate his debts. Since Charles had an excellent credit rating, he was able to borrow at a 12% effective annual rate. Charles is required to make monthly payments. Charles will make equal payments for the next 36 months. Which one of the following values is closest to his monthly payments?

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