Macroeconomics plus MyEconLab plus eBook 1-semester Student Access Kit (6th Edition)

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Econ 304 Sonoma State University Dr. Robert Eyler Fall 2007 Homework #2: Due September 20, 2007 Please answer the questions fully and draw graphs or use equations when needed. Show all your work and remember that these are practice for the midterm questions, so try your best here. It will pay off later. 1. Explain the consumption-saving tradeoff of the consumer by using the following methods: a. The microeconomic foundations analogous to the utility maximizing consumer; and b. The macroeconomic ideas of intertemporal consumption. c. State and explain the optimal condition for intertemporal consumption, and discuss how the elasticity of intertemporal substitution and the interest rate are connected in terms of “consumption smoothing” 2. The financial markets link households that save and both firms and governments that borrow. a. Explain the role of the real interest rate and how it motivates planned purchases of capital by firms.
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern