Midterm2_2004

Midterm2_2004 - Introduction to Economic Analysis Fall 2004...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Introduction to Economic Analysis Fall 2004 Mid-term Exam: November 15 Time: 1 hour and 15 minutes. Try to answer all questions. Good luck! Question 1 (30 points) Consider a two period economy. Agents are all identical, that is, there is one representative agent. The representative agent is alive at time t and t + 1, and has preferences: lnx t + βlnx t +1 , β < 1 . This agent is endowed with 10 units of the consumption good at time t and at time t + 1. There is no inflation in this economy, and hence you can assume throughout that the price for the good at time t is 1. 1. Write down the consumer maximization problem of the representative agent (call the real interest rate r in the budget constraint), first order conditions, and demand functions. 2. Write down the market clearing conditions (that is, feasibility condi- tions) for the whole economy. 3. Solve for the equilibrium interest rate and for the representative agent equilibrium allocation. 4. Suppose the agent cannot borrow and lend, that is, savings are zero
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/25/2011 for the course ECON 006 taught by Professor Bisin during the Spring '11 term at NYU.

Page1 / 2

Midterm2_2004 - Introduction to Economic Analysis Fall 2004...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online