Question

Ci and Yi are consumption and income at period i (i=1, 2). When the world interest rate is r (100xr%), C2= representative agent has the utility function U=C1C2. In an autarky economy, when Y1 =100 and Y2=132, the level of the utility is When the interest rate rises by 0.1, C2 changes by In an open economy with r=0.1, the level is compared to C1 with r=0.1. Choose the reason for this change. compared to C2 with r=0.1. C1 changes by C1 becomes cheaper. C2 becomes cheaper. Opportunity cost of interest rate becomes smaller. A

          Ci and Yi are consumption and income at period i (i=1, 2). When the world interest rate is r (100xr%), C2=
representative agent has the utility function U=C1C2. In an autarky economy, when Y1 =100 and Y2=132, the level of the utility is
When the interest rate rises by 0.1, C2 changes by
In an open economy with r=0.1, the level is
compared to C1 with r=0.1. Choose the reason for this change.
compared to C2 with r=0.1. C1 changes by
C1 becomes cheaper.
C2 becomes cheaper.
Opportunity cost of interest rate becomes smaller.
A

Ci and Yi are consumption and income at period i (i=1, 2). When the world interest rate is r (100xr%), C2=
representative agent has the utility function U=C1C2. In an autarky economy, when Y1 =100 and Y2=132, the level of the utility is
When the interest rate rises by 0.1, C2 changes by
In an open economy with r=0.1, the level is
compared to C1 with r=0.1. Choose the reason for this change.
compared to C2 with r=0.1. C1 changes by
C1 becomes cheaper.
C2 becomes cheaper.
Opportunity cost of interest rate becomes smaller.
A

Added by Raul W.

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