For a Competitive Equilibrium in a Two-Period Model,which of the Following

question 51

Multiple Choice

For a competitive equilibrium in a two-period model,which of the following is true?

• A) each consumer picks first- and second-period consumption given the real interest rate
• B) there must be an equal number of borrowers and lenders.
• C) the present value of government spending must be greater than the present value of taxes.
• D) the financial market clears.
• E) all deficits are financed by issuing debt.

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Definitions:

Capital Account

An account of a country’s transfer of capital to or from other countries.

Public Land

Land owned by the government for public use or preservation.

Manufacturing Units

Facilities or factories where raw materials are transformed into finished products through the use of machinery, labor, and production processes.

Economies Of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.