ECO221B_HW2

ECO221B_HW2 - ECO 221B HW 2 Due Date: February 14...

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ECO 221B HW 2 Due Date: February 14 (Beginning of the class) Note: I will make a review and go over the answers to the homework in the class on February 14. So, to be fair to students who submit their HW on time, I will not accept any homework after the class starts. Contact information for the TA: Name: Douwere Grekou Email: dgrekou@uwo.ca or grekoud@yahoo.fr Problems: Consider a two-period economy with consumers, firms, and a government. Consumers choose between consumption and saving, and firms choose investment. 1. Using consumer’s and government’s budget constraint show that when the goods market is in equilibrium, i.e. Y=C+G+I, the credit market will be in equilibrium: “national saving” will be equal to investment, i.e. S=I. 2. Consider a temporary increase in government expenditure in the current period by $10 billion. Assume that government finances this extra expenditure by borrowing in the current period. a.
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ECO221B_HW2 - ECO 221B HW 2 Due Date: February 14...

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