PLEASE URGENT Quiz #3 E322 In an open economy, a household can save by lending i

Question

PLEASE URGENT

Quiz #3 E322 In an open economy, a household can save by lending internationally or lending to its own a2 a2 government. Which variable represents international saving or lending by the household? L. c. d. s 2. In an open economy with complete international credit markets, the lifetime after-tax budget a. )2 -Ag constraint is C1 In an open economy, where a country can participate in international credit markets cither directly or through its government, public investment is a a way to raise household lifetime wealth b. needed to alter the timing of household consumption c. necessary to guarantee the Euler equation is satisfied d. all of the above 4. In an open economy with a perfectly competitive international market for funds, the two single period budget constraints for the household are cs (l-)y1 rs and for the government are 82,(+')b 2 single period constraints to derive the household lifetime budget constraint, showing all steps Use the

Explanation / Answer

The Classical model uses the assumption that : All wages and prices are flexible .

2) In the classical model, aggregate demand and aggregate supply will  D) intersect at the point of full employment .

3) Victim of : C) money illusion

4)  B) households save more and businesses invest less.

At higher rates of interest business will invest less since loans have become costly . Households save more since they get more return on savings .

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