Home » (30 points) Consider an economy with two types of consumers labeled h and I. Consumers have preferences for current and future consumption given by:…

# (30 points) Consider an economy with two types of consumers labeled h and I. Consumers have preferences for current and future consumption given by:…

Some consumers are very patient and have a high βh, others are impatient and have a low βl (βl < βh). Note that β is the weight in the future consumption, or the discount rate. Consumers′ are equal in their income and there are no taxes (that is, t = t = 0). The government does not have to finance any spending.

There are N consumers of each type in this economy. That is, in total there are 2N consumers, N of them are type h and are type l.

I recommend that you make a change of variable to solve this problem: instead of working with the net interest rate (r), work with the gross interest rate R = 1 + r.

Find the equilibrium if y = y’ = y-bar.

1. First, solve the problem of a type h consumer. This is to find ch, ch’ and sh.
2. Second, solve the problem of a type l consumer. This is to find cl, cl’ and sl.
3. Finally, using the market clearing condition to solve for R as a function of exogenous variables.

(30 points) Consider an economy with two types of consumers labeled h and I. Consumers havepreferences for current and future consumption given by:UhCh; Ch )= In ch + Bh In chul(c. ci) =Ing+Biinc

## Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
\$26
The price is based on these factors:
Number of pages
Urgency
Basic features
• Free title page and bibliography
• Unlimited revisions
• Plagiarism-free guarantee
• Money-back guarantee
On-demand options
• Writer’s samples
• Part-by-part delivery
• Overnight delivery
• Copies of used sources
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)

# Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

### Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

### Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

### Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.