consumption (L11) Flashcards

1
Q

what does keynesian c function imply

A

increase in current income increases consumption

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

budget constraints with saving, consumption and income

A

c1=y1-s
c2=y2+(1+r)S

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

lifetime BC

A

C1+C2/1+r= y1+y2/1+r

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

how to maximise utility with lifetime BC

A

use indifference curves and find tangency with lifetime BC
when income is lower than consumption it shows borrowing and when consumption is lower than income it shows they’re saving

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

decision to save or borrow depends on

A

interest rates
income path
preferences

How well did you know this?
1
Not at all
2
3
4
5
Perfectly