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TimestampNameTopic of your questionDescriptionAnswer
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11-MarHugh JanusWhy?Why does Gustavo suck donkey balls?
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14-DecGROUP STUDY SESSIONCOME TO FOLWELL ROOM 08 IN BASEMENTFOR ALL THOSE STUDYING FOR THE FINAL TOMORROW COME TO FOLWELL ROOM 08!!!!!!!!
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14-DecStefanie RebersProblem 2, Part 7How can we find numerical answers for part 7? Do you mean expressions that represent c1*, c2*, and k*?
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14-DecCarriePractice Problem 1.5I suppose utility function= log() and find C1 is not relate to x. How can I explain this question? If the utility function is different, is this conclusion still hold?
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14-DecChi ZaoChapter P119When the capital is overaccumulated, the books say to issue a constant stock fiat money can get to the golden rule, which means k decreases.
However, the Topin effect says that the z increases will lead to a k increases.
I am confused because it looks like they are contradiction. Can you explain this for me?

This is in page 119 and page 134.
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14-DecJiakun LiuPractice Exam Problem 2.1I don't think that 1/z could be equal to 1/k^0.5 by the given values in this case. Can k be greater than y?
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14-DecXiaochen YangPractice 1.4How to explain Euler Equation? Is it ok to answer like this way?
The left-hand-side(U'(c1)/beta U'(c2)) represents the marginal cost of holding capital and right-hand-side(x) is the marginal benefit of holding capital.
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14-DecHaoranProblem 2 in practice questionI mean lifetime budget constraint.I see. You do not need the LTBC here...
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14-DecChi ZaoChapter 6When the capital is overaccumulated, the books say to issue a constant stock fiat money can get to the golden rule, which means k decreases.
However, the Topin effect says that the z increases will lead to a k increases.
I am confused because it looks like they are contradiction. Can you explain this for me? Thank you		It would help if you mention the page in the textbook...
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14-DecJiakun LiuPractice Exam Problem 2.1Is the capital level related to z? Since the real return of money in this case is 1/z which is smaller than 1 and the return of capital is 1/k^0.5 which is larger than or equal to 1. Should people hold only capital in this case?just equate 1/z to f'(k). Then find k
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14-DecStefanie RebersProblem 2 from Practice Excercises-Part 2For Problem part 2. To increase welfare for future generations, would you increase the growth rate of money, z? Read about the Tobin effect in the textbook!
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14-DecStefanie RebersProblem 2 from Practice Excercises-Part 2For Problem part 2. To increase welfare for future generations, would you increase the growth rate of money, z? Read about the Tobin effect in the textbook!
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14-DecStefanie RebersPractice Exercise: Problem 2-Part 1For part 1. Is the optimal capital where f'(k)=1/z...thus k*=z^2?that is correct
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14-DecChristineMRS CURVEIs the only thing that can shift a MRS curve beta?! Or if the preferences change?!


Thanks!
No, taxes will do as well
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14-DecSanghoon HanExample 8.2b.
(1) 15000
(2) 4
(3) 1/4
(4) 6000
(5) 48000x

c. answers would be the same as part b

Could you check my answers?
I answered your previous questions about numbers. That should suffice to have a general idea on how to deal with similar problems
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14-DecHaoran HuProblem 1 in practice questionAlso in problem 1, question 5, I'm wondering how can we find the algebraic formulas for optimal consumption, should we use In() instead of u() in this problem?Assume a function!
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14-DecHaoran HuProblem 2 in practice questionIn this case, LBC is c1+zc2+k≤y+zf(k), is that right? Thanks!I do not know what you mean by LBC...
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14-DecStefanie RebersMRS and Capital GraphsAs I go over my notes, some graphs have Marginal cost and marginal benefit titling their corresponding curves. Whereas others have MRS and x. If i'm not mistaken the graphs are representing the same thing so why is it that different titles are given to their corresponding curve curves?

Is marginal cost here assumed to be the same as MRS? Where as Marginal benefit is the output obtained from capital i.e. (f'(k)=x)?


The MRS could also be regarded as the marginal cost of holding capital (you have to give up c1 if you want to consume more of k). x could also be regarded as the marginal benefit of hoding capital because you earn x per unit of consumption allocated to k.
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14-DecStefanie RebersPractice Questions Problem 1-Question 8For part 8. c) and e):

Is it correct that MRS=x which is the same as the standard problem. Thus, the graph remains the same as it was on the quiz.

Similarly, is the only thing that can shift the MRS curve, beta (i.e. a change in preferences)? 		Notice that although we still have, in this case, MRS = w, MRS is now a function of T, because c1 is a function of T, from the constraint when young. Therefore, the graph will not be the same as in the quiz.
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14-DecLucasProblem 2How do we include z into this problem? When the social planner part comes in it would appear as if there is no z, so f(k)=1 (population is constant), but it feels like it should be equal to 1/z, because i think that's the answer for part 1. Is it because there is no money in the social planner problem that f(k)=1 or should there be a z in there,somehow?Precisely, there is no money in the social planner's problem. Read the question carefully. The question asks under which case the two values of capital, one in competitive equilibrium, the other in the social planner's probem, coincide. The answer should be straightforward.
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14-DecSanghoon Hanchapter 8 ex)8.28,2
a) 4
b) 1.082
c) 20000
d) 10
e) 5500
f) 16050

is it right?
All, except f), are right. In f) you are missing the unintermediated capital and the fact that the return applied to capital must be the two period return, e.g. 1.1^2
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14-DecSanghoon HanPractical examIn practice exercise problem1)8b

c1+k=y-kθ
c2=xk
is it correct?		Yes!
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13-DecStefanie RebersMRS and Capital GraphCould you please tell me what the purpose of the graph of MRS and capital is? For example what is it trying to tell us? I think that will help to intuitively answer my questions for question 1. part 8.

More specifically, what would cause the MRS curve to shift left or right? 		Well, the optimal level of capital from an individual perspective is given by the intersection of these two curves. MRS is a function of k and x is constant. To answer the question on what would cause a shift in either curve you have to remember the definitions of MRS and x.
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13-DecSanghoon HanExample 8.1, 8.2I want to know my answer is correct or not.
8.1a) 0.2 x 100 = 20
b) decrease

8.2 a)
1) 3000/0.1 =30000
2)..1x600x100/3000 =2
3) 1/2
4)9000
5).9*100*600=54000		8.1 is correct, b) decreased by half. 8.2 is correct except for 4 and 5. In 4 you are using the formula for seignoriage incorrently. v will also change because of the expansion of money. Moreover, the additional money created is 1500 not 4500. In 5 you are missing x. So it should be your answer times x
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13-DecChristine NoldeQuiz 6, Velocity, Output of capitalHello,

Could you please put up the solutions to quiz 5/6. Especially 6 since we only went over the modification in class not the actual quiz?

Also will Velocity of capital be on the exam? We never went over it but its included in the chapters you said would be on the exam.

Also, when we did those questions in groups in class regarding the output of capital f'(x), could you put those questions online so we can use them as a study tool? I have them in my notes but when we went over them as a class there are a few i'm not sure if they are correct since our group never checked them.		1. I discussed the answer key in class, 2. you can skip it, 3. This should be in your own notes
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13-DecStefanie RebersPractice Questions Problem 1-Question 8With regards to my last question for b.
Should it instead be:
c1+k = y - k(1-θ)
c2=xk.

I'm confused where to put the proportional tax. I know it has to be tied to Kt in someway during the first period because the tax is on capital holdings.
Work out an example yourself. Use numbers for all the variable and think how to include theta
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13-DecStefaniePractice Questions Problem 1-Question 8Can you tell me if i'm setting up the modifications for question 8 parts a), b), and c)?.

a) c1 + k = y, c2=xk + (1-d)k

b) c1 + k(1-θ)=y, c2=xk

c) c1 + z = y-T, c2=xk

I would then use these functions to solve for MRS and find the graphs, correct? 		a and c look correct. Think more on b. Recall that theta is a tax not a subsidy.
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11-DecSanghoon HanPracticel examIn practice exercise problem 1)6b,
I got

young= c1+k=y
old= c2=xk-xkδ
= (1-δ)xk
Is it correct?		No, it is not. Hint: Take a look at the answer key of PS3
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20-NovYuqing Upcoming quizAm I allowed to know if the upcoming quiz is about chapter 6 or chapter 7? Thanks!Chapter 7, based on the discussion we had in last lecture
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16-NovBenPS3 Question 3.1in problem set 3, when it talks about how after production takes place, δ units of capital are lost to depreciation, does that mean the lost capitol is a fixed number of goods, or if it is a certain ratio of capital that is lost and so the amount you have changes how much capital is lost to depreciation?
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14-NovKevinPS3 Question 2.1I am having a hard time finding the prices for each country if there are no foreign currency controls in effect. Do I use the world market clearing condition?Yes, see page 79 in the textbook
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21-OctEricProblem 2 q.3I know that C2t= v0mt, how does the z less than one affect that?Compare the value of v1 under both cases z=1 and z<1
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20-OctMichaelProblem 3.5I was wondering, what do you mean by real balances of fiat money?
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20-OctMichaelProblem 3.5I was wondering, what do you mean by real balances of fiat money?I mean real money holdings
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22-SepMichaelProblem 1, Q4So I have gotten the Euler equation but when I input it into the budget constraint I get numbers that are not easily divisible nor do I have the ability to factor because one is to the power of 1 and the other is to the 1/2 power so I would get x(1+ y/x).

So my question is should I square the vt/vt-1, or should I go about it another way?
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21-SepDavidProblem 3 Question 5How's a budget set for an individual drawn that it makes it different from question 2?It is something you have to figure out
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21-SepCarlos DangerProblem 2, Q1What is the significance of the endowment growth on the constraints? Or how would it change the formulas?It is gonna change the contraint when young and thereby the lifetime budget contraint. Also, in this case you will see that we cannot longer invoke the stationarity assumption. Consumption allocations will depend on the endowment which is increasing
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21-SepJianing Problem 2 Is real return same as real rate of return?

The rate of return I calculate have Ct which is unknown. Do I need to calculate the Ct by using lagromgion function from question one and then put it into question two?		Yes, they are the same thing. Use stationarity, as we did in class, to get rid of consumption
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21-SepBenProblem 3 question 3For for question 4, when it asks to find the equation representing the equality of supply and demand in the market for money, wouldn't there be 2 equations we find instead of just 1 where 1 is for the young generation and 1 is for the old generation?
There is only one equation describing the clearing condition in the money market.
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21-SepJianingProblem 1 question 4&5For question 4, can we assume there is no growth rate? If I use the growth rate=1, then the answer I got is a real number not an algebraic expression.

For question 5, are we using the utility function from question four or we can assume the utility function is a log function? 		1. No, please find algebraic expressions as general as possible. 2. Use the preferences given in question 4. You have to provide the intuition of the algebraic expressions for consumption allocations and money holdings you found in 4. This is why it is a good idea to write these algebraic expressions as general as possible, that is, c1, c2 and vm as functions of y and v_t+1/v_t
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18-SepLizpart 3 of exercise 1 in problem set 1In part 3, should we be assuming that M is constant and a stationary state?Yes to both questions
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18-SepKevinFeasible SetI don't understand the feasible set in problem 3. What is the value of B? and how do we determine the budget constraints with two endowments?I think I answered this in class. If you still have doubts please let me know
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17-SepKevinFinding PriceI'm trying to find the price on problem 6 on the problem set. Is v(t)= 1/p(t)?Kevin, that is not the answer I'm looking for. The question is about the equilibrium price v(t). The expression v(t)=1/p(t) is just an identity. Hint: use the clearing condition in the money market and the expression for real money holdings to infer absolute prices of money. We also did this in the previous class. See the example on competitive equilibrium we discussed on Tu, 09/16/14
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17-SepKevinFinding PriceI'm trying to find the price on problem 6 on the problem set. Is v(t)= 1/p(t)?
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9-JulSarahIs there money transfer to initial old?Is there money transfer to initial old?
C2,1=v1m0 or C2,1 = v1m0+ a1?		No.
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9-JulShivaa Distortionary taxWhen we take out the optimal consumption in case of distortionary tax, why do we not include a (transfers).
Is distortionary tax not inflation? So should we not use transfers to show the supply of money?
Basically, what is the difference between OLG model with growing fiat money and the one with transfers?
When money grows the source of revenue is the printed money. The difference is how the government spends that printed money. In one case we assume government makes transfers to the old guys and in a second case the government finances its own consumption (G)
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9-JulLewinExercise 1 of problem set 1 answer key; Exercise 3 of problem set 1Exercise 1 of problem set 1 answer key:

The answer you provided "Ntc2,t+1 = Nt+1(y − c1,t)." I'm getting Ntc2,t+1 = Nt+1(y − c1,t+1) instead. Am I making a mistake somewhere or is there a mistake with the answer key?

Exercise 3 of problem set 1:

The question does not explicitly state that the old receive transfers from the government. Are we to implicitly infer that there will be a transfer from the government to the old if there is money growth of (z > 1)?		The equation you are getting is right. No, I'll let you know
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7-JulChristopher KimPractice MidtermYou mentioned that a practice midterm would be posted Monday at latest. I just sent an email
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2-JulKunle FawoleQuestion 3, number 5 when it says "argue that", does this mean prove mathematically or you do you want a word explanation. Mathematically. In words is fine but I'm afraid you will need the math first
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2-JulKunle Question 1 After combining the consumer budget constraint with the fact the money supply is constant... I get to this equation.

[YN(t+1) = N(t) C(1,t) + N(t+1) C(1,t)]

Is there any intuition that I am missing in order to solve the problem completely.		You are missing C2t+1 from the budget constraint!
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2-JulShivaaQuestion 2 I am confused about stationarity. In my notes I see that in SE, Vt+1/Vt = 1
In book with growing population its given Vt+1/Vt = n
So, which is the right one for stationary equilibrium?		Stationarity means that every young generation consumes the same allocation and every old generation as well. Vt+1/Vt=1 (when population is constant) and Vt+1/Vt=n when population grows at rate n is just an implication of stationarity
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2-JulJunjie ChenQ1The question "logarithmic preferences as in class" Is that assuming U (c1,t c2,t+1)= log (c1,t)+ Blog(c2,t+1) ?Yes!
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2-JulAlexProblem Set 1, Question 2, Number 2We are supposed to give the optimal consumptions in terms of the givens. What is the comprehensive list of given variables that would be in the answer? For example: beta, n, z, y, etc., those variables that are exogenously determined
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29-JunSue KimQuesiton 1, PS1Do we need to show the answer algebraically? or can we just explain why it is the case?Algebraically
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27-JunAlex OckendenQuestion 1, PS 1What do you mean by "do not assume stationarity"? What is stationarity?The definition is inside parentheses. We talked about this in the last two classes. Also, see the textbook
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15-MayHojun LimPresentation from Problem sets.Do we have to study for presentations from all problem sets? Or Do I need just to study them from Problem set #3 and #4?The final is cummulative (?)
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14-MayYizhouLow and High questionFor the question asking for Lagrangian and FOC condition, as this is a unconstrained one, I think there's no need to write down the Lagrangian. If there is one, how can I write down?

Thanks
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14-MayYizhouProductivity Slowdown/ 3 and 41. How to define a competitive equilibrium (CE) for this economy, do I just need to find the exact Ns* and Nd*?

2: How to set up a Social Planner (SP) problem? 		Do not worry about those
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13-MayAnishConsumption Tax on Consumer ProblemOn February 25, we looked at a consumer problem with a variation in which the consumer had to pay a consumption tax for every unit of consumption purchased (this tax was called "d").

Is the BC for this case: c=w(h-l) - dc?

If not, is there a different way I should be looking at the problem?		You are right
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13-MayDaniMidterm, labor shareWhy don't we consider wage when finding the Nd in the labor share problem.

Wouldn't it be..find the derivative of profit=y-wNd.
so when deriving ND then profit= Dy/DND- w.

?		Yes, that is actually the bonus question. Notice that it asks you to use the optimality condition that, as you said, comes from the maximization of profits
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5-MayHojunPS4, part 2, #5For the part 2, Ricardian Equivalent, from the question 5,
Since the old case has T=10 and T(tomorrow)=10, I get '0(zero)' for saving.
And, since the new case has T=5 and T(tomorrow)=10+5(1+r), I get '5(zero)' for saving. And then, should I explain about their relationship?
And, indeed, both interest rates of new and old are same, so I though both savings should also be the same, but I got different answer. I'm not sure how I can explain.		Ok great. Suppose your answer for consumer's savings are correct. Then compute the savings for the government. Finally, follow the definition of national saving (provided in the problem) to calculate it. Regarding your second question, use the diagram of the market of funds and see what happens.
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5-MayHojunPS4, Presentation, #5For the presentation part, question 5, I actually don't understand the hint. Do you mean that we need to just follow all facts from the article?
Plus, I think there is kind of error: we can't exchange r with (alpha) in the problem. Maybe I'm not comprehending well. Can you give me any hint?		First, I mean that in your expression for consumption you could use the hint to simplify your algebra and possibly answer the bonus question. No, I do not mean that you have to follow all the facts from the article. I did not say you can exchange alpha for r. I said consumption admits a formula like c=alpha W where alpha is a contant (not necessarily r but possibly a function of r) and W is the present value of endowments. I can give you a hint but I'd be more helpful if you let me know what your doubts are precisely. Try to solve the problem and then let me know.
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5-MayYanPS4 presentation part7 I know that α1，α2，α3，α4 is a sequence that converges to α5 and α decreases as T goes up. I calculated α1，α2，α3，α4 and α5 and could you give some hint on how to explain the relationship? ThanksSure. Think of it as trying to distribute something across more and more periods...
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4-MayNurlinaps4, part 2, 4Does the demand and supply in funds shifts for the new equilibrium? Because when I calculated in question 5, the national savings is still 0 for the new equilibrium. Are we to expect some shifts in the graph or does it remain stagnant? I'm not clear on this.That's actually the question. Treat this diagram as a AS-AD diagram and ask yourself whether a shift of the curves is warranted or not
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4-MayHojunPS4, part1, 7For 7 which is bonus point, I think you want me to mention the elasticity of marginal utility of consumption with respect to consumption. However, I'm kind of confused how I can be talking related to it. Isn't the elasticity related to Demand?Elasticity is a general concept related not only to demand. What I want you to do is compare your results. That's all
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4-MayHojunPS4, part, 5For number 5 from the part of Ricardian Equivalence, The question is, "How much are savings of each agent and national savings in the old and new equilibrium?" Do you mean that the old is when T=10 and the new is when T=5? Can you give me some hints how I should start for this question?Just calculate how much consumers and the government save in each case. For instance, in the old equilibrium consumers save 0
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3-MayNurlinaPS4 presentationFor the presentation report do we have to type it out or could we write all the equations by hand?By hand is ok.
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2-MayBaxterPS4, 2.2Are you looking for an equation or a number?An answer
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13-AprJordanPS3, exercise 2, h-jHow do we explain what happens to r as a result of the savings curve shifting when there is nobody demanding funds? Like you said in class, when somebody saves money in this model, it's as if they just don't touch it until the next day, when there is magically more than there was the day before.Use the supply and demand model you learned in Econ1101
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12-AprNurlinapart c) exercise 1 problem set 3Is K given freely?Yes, it is
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12-MarHojun LimMidterm question related to Presentation parts.Should I get ready for presentations of PS1 and PS2 and also read all articles?
Do you mind if you give me some hints how I can study for presentation parts wisely????
Thanks!
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12-MarHojun LimThe relationship between marginal rate of substitution and WageCan you tell me how I can know if the marginal rate of substitution will be equal to the wage in some cases?
I remember that for question #10 in PS1, you said that we can't say that MRS=W, with tax.
How do we know? and what's important in general?
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11-MarClaraMarginal cost and marginal benefitI am confuse in the first question in both practise midterm. Workers decide whether to work depending on the wage or MRS is base on marginal benefit or cost of working? Please explain what are the difference in this two question. Thank you. Remember that the every activity entails costs and benefits. In partcular, when the worker is deciding whether to supply an additional hour worked he has to balance the cost and benefit associated to that decision. The wage is the upside. That is, if he finally supplies that additional hour then he will earn that wage. On the other hand, the downside is the MRS which means the loss in utility because the worker dislikes working (instead of spending that additional hour in leisure activities he is using it to work). Hope it helps.
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10-MarDejaGeneral QuestionCould you explain how we know when the substitution effect outweighs the income effect and vise versa, and when they are equal as if you are explaining it to grandma? Grandma was also wondering if you could you explain the intuition behind each scenario.Deja, wich effect is greater than the other depends on your preferences. You and me could react to the same wage changes in different ways. Suppose the wage increases. I may be willing to offer less hours and you more. Since it is difficult to measure which effect is in fact greater than the other for a given person (unless one tests your behavior as a response to wage changes) we usually make assumptions about it. One assumption is that your preferences are represented by a utility function of the Cobb-Douglas type. We saw in class that in absence of nonlabor income (like profits) both effects cancel each other out. Going back to your main concern. Suppose someone tests your reaction to a sequence of wage raises in a laboratory: w1, w2, w3 (w3>w2>w1). Suppose that when someone offers you w2 instead of w1 you are willing to supply more hours. But suppose the opposite happens when the offer is from w2 to w3. It is clear that from w1 to w2 the substitution effect wins while from w2 to w3 the opposite occurs. I may react in a completely different waty. Again, it is a matter of preferences. In class we assume that there is only one consumer that represents both of us.
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4-MarAnishPS2, question 1b.Should we assume that A=1 or just leave A as a variable in the algebraic expression for the labor share?No
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19-FebTaylorPs 1, Q9I am very confused how to calculate the growth rate. I understand we are suppose to do MRS of tomorrow over MRS of today, but how do I get growth rate from this? I came to office hours and I still am confused.
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19-FebSashaQuestion 10, Problem Set 1Can we assume that the MRS=w(1-T)? Or do we need to show how we derived it using the budget constraint?Have to show your work. So do the second thing.
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19-FebJordanPS1, q8How are we supposed to use l'hopsitals rules on (f) when it isn't in fraction form?Take logs
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18-FebAnishProblem Set 2, question 4To solve for the elasticity of marginal utility with respect to the composite commodity, I am taking the derivative of the utility function in terms of the composite commodity. Then, as the hint points out, I need to multiply by X/Y (with these variables just being general). I know that the "X" in this case would be the composite commodity, but what would be the "Y"?Y would be the marginal utility with respect to the composite commodity, z^(-sigma) where z is the composite commodity
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17-FebHojunPS1For Homework 1, for equation (d),
is it like,

u(c,l) = log(c) - b(epsilon/1+epsilon)((1-l)^((1+epsilon)/epsilon)))?
I was just confused with,,
If (epsilon/(1+epsilon)) times(x) (1-l)
or
If (epsilon/(1+epsilon))^(1-l)		Leisure is supposed to be a good (working is a bad). So it is ok with (1-l). Here h=1.
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17-FebHojunPS1For question 9,
what do you mean by "Do it for today and tomorrow?"
How can I explain related to the equality between the marginal rate of substitution?		For today suppose you have MRS=w. Using the terminology given in the PS you'll have MRS'=w' for tomorrow where prime denote tomorrow's variables.
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17-FebHojunPS1For question 9,
what do you mean by "Do it for today and tomorrow?"
How can I explain related to the equality between the marginal rate of substitution?		For today suppose you have MRS=w. Using the terminology given in the PS you'll have MRS'=w' for tomorrow where prime denote tomorrow's variables.
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17-FebBaxterPS1In question 10 do you want us to just write out the lagrangian and the first order conditions?No. After getting the FOCs you end up having two equations: MRS=w and the budget constraint. You have two unknows and two equations. Next solve the sytem and find algebraic expressions (that is, formulas) for consumption and leisure, separately.
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17-FebIan ParkPs1For #6, how are we supposed to express the labor supply and the wage in terms of epsilon? I got (h-l) for labor supply and c/(h-l) for wage at the moment. Answered during office hours
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16-FebHojun LimQuestion 3 for homework#1I checked that both parts of a) and b) represented the same preferences.
But, what kind of things can I say to argue with them?
And, you said I need the answer which fits in one line. Does it means that I just answer only one sentence?		Hint: from 3101 you learned that for preferences what it matters is not the cardinal property of the utility function but its ordinal property. That is, it matters how you rank your preferences and not the units of the utility function.
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15-FebHojun LimQuestion 1 for homework#1For question 1, do I have to get same answers of consumption(C*) and of leisure(l*) for each?
So, is each((a),(b),(c),(d),(e),(f)) supposed to have same answer of them?		I do not understand the question. Answers are not supposed to be the same. Please be precise. Thanks
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21-JanAnish C5th Edition TextbookWould it be possible for you to provide all of the assigned readings for the 5th edition of the textbook?

Thanks.		Sure, please bring your copy next class because I do not have a copy of that edition. Thanks.
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17-DecSam Kpractice finalon the last exercise problem 4, I keep getting the solutions 5(2+r)=t', I am using the equations 5+5/(1+r)=0+T'/(1+r) . Is this correct?Do not use any equation. If the government reduces taxes by 5 and keeps G and G' unchanged then it has to issue debt by 5. Now tomorrow the government has to pay the debt back by 5(1+r) in order to satisfy the intertemporal constraint.
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17-DecSam Kpractice finalon the last exercise problem 4, I keep getting the solutions 5(2+r)=t', I am using the equations 5+5/(1+r)=0+T'/(1+r) . Is this correct?
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17-DecSam Kpractice finalon the last exercise problem 4, I keep getting the solutions 5(2+r)=t', I am using the equations 5+5/(1+r)=0+T'/(1+r) . Is this correct?
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16-DecZhe Zhang(Jessica)be related to last one Chapter 11. Savings,Investment and Government DeficitsA decrease in the current capital stock K causes the Yd curve to shift to the right. When there is a lower current capital stock, perhaps because of destruction, then the demand for the investment goods, Id(r), increases for each r.
Q: why the decrease in K causes the increase in I?		One way to see it is that now that you have lower K and assuming your desire level of capital is the same it means that you have to invest more in order to compensate for the lower K. The other one is in the book. A lower K means a higher marginal product of capital in the margin. It means that it is profitable to buy more capital goods (to invest) in the margin. Hope it helps.
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16-DecZhe Zhang(Jessica)Questions on the book (fifth edition) Page.406A decrease in the current capital stock K causes the Yd curve to shift to the right. When there is a lower current capital stock, perhaps because of destruction, then the demand for the investment goods, Id(r), increases for each r.
Q: why the decrease in K causes the increase in I?
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16-DecVeldan2 Period with investment firm we found the

C* and C*' and we found
MpND and MpND' and MPK'

Are notes stopped here
==================


but I wan to see if this clears
C* + I* + G1 = MpND

question 1:
what do I Put in G1?

Question 2:
for I* do we need to find all the endogenous to get I^(star)?

I guess what i asking is what is the answer for I*

is it this the answer?????
========================
I* =K' -K +dK

thank you 		Please read Handout #7 and the book Chapter 10
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16-DecZhe Zhang(Jessica)Questions about bookA decrease in the current capital stock K causes the Yd curve to shift to the right. When there is a lower current capital stock, perhaps because of destruction, then the demand for the investment goods, Id(r), increases for each r.
Q: why the decrease in K causes the increase in I?		Please be precise on the edition, page, chapter, topic. Thx
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15-DecZHE ZHANG(Jessica)Practice exercise: One period problem 9My answer:
1. consumer pays the tax tc:
c=w(h-l)(1-tc)
i got MRS= （1-α)*c/(α*l)=w(1-tc)
2. Firm pays the tax tf:
π=zF(k,N)-w*N(1+tf)
I got MPn=w(1+tf)
let MRS=MPn
tf+tc=0
is this correct?		The last three lines are not. Equate your first MRS to MPn (when the firm pays no taxes) and then equate your second MPn to the MRS (when the consumer does not pay any tax). Then conclude.
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15-DecZHE ZHANG(Jessica)Notes（two periods without governmentIn my notes:
c'*=c*=(1+r)*w/(2+r)
1.wealth increases --> c* and c'* increases

2. r increases -->if borrowing, c* decreases, c'* increases (Q:WHY C'* increases)
r increases --> if saving , c* increases, C'* decreases, (Q: WHY c' * decreases)

3.r is price of today
so , r increases, c* decreases, c'* increases
Could you explain 3 more? Also, 2, 3, under the condition of r increasing, but the result we get is different? confused.		In 2 c' decreases and increases, respectively, as c does. In 3 as r increases c becomes more expensive relative to c' then you will consume less of c and more of c'.
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14-DecVeldan practice exercises with Government #3On Tuesday one of the students asked about problem #3(with Gov). We never got an answer for it. I am wondering if this is the correct answer

ANSWER:
=======
c+c'/1+r = y+y'/1+r - 1/N [G+G'/1+r]

Thank you 		Yes, then consumption today and tomorrow only depends on the presend value of expenditures. Do not include N.
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14-DecVeldanpractice exercises with Government #8I need some clarification on practice exercise (With Government) problem #8

In class on Tuesday you said we should assume no Tax on problem #8 Why?

"On top of the page its says "government that levies lump-sum taxes"

I
I made a simplification. Your homework is to include taxes
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13-DecVeldanMidterm 1 Playing with the firm's problem:

on problem d: it says Now consider the firm has to pay a proportional tax so you write
=(1+t)

However on problem g: the firm has to pay a proportional tax on sales
= the answer becomes =(1-Q)

My question is why is the first one plus (+)and the second one negative(-) and furthermore, how can i distinguished when i should put + or -

thanks 		You should view the tax as a cost, generating less profits. Make sense, right? Like in real life. It is just a matter of trying alternative forms. Suppose we use 1-t in the first case instead. If you do this you'll see that the tax is something like a subsidy, increasing profits, which does not make any sense. 1-t makes sense. How can you distinguish them? Well, there is no a general way to proceed. What I can tell you is that yu should try to think of real life examples, like you running the firm, hiring workers, and paying taxes.