Suppose the economy is described by the following simple model: Y = C + G C = a + bYd Yd = (1 – t)Y a. Give an expression that relates private saving…
September 3, 2020
“Mypreferenceshavechanged,sothatIdon’tlikesugarasmuchasIdidbefore.ThismeansthatInowhaveasteeperbudgetline.”Canthisstatementbetrue,orisitfalse?
September 3, 2020

You open a savings account to save for a new house. Every month you put $100 into a savings account which pays 5% interest compounded monthly. At the end of each year you receive a $500 bonus which you place directly into your “house fund”. How much is in this account after 5 years?

Monthly interest rate = r = 512*100 Total money in the account at the end of one year,12111= $100 (1 + r ) + $100 (1 + r ) + …. + $100 (1 + r )⎡(1 + r )12 − 1⎤⎦= $100 (1 + r )…

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