MrOBKandle Will Live for Only Two Periods

question 60

Multiple Choice

Mr.O.B.Kandle will live for only two periods.In the first period he will earn $100,000.In the second period he will retire and live on his savings.Mr.Kandle has a Cobb-Douglas utility function U(c₁, c₂) = c²₁c₂, where c₁ is his period 1 consumption and c₂ is his period 2 consumption.The real interest rate is r.

• A)If the interest rate rises, Mr.Kandle will save more.
• B)If the interest rises, Mr.Kandle will save less.
• C)He will consume the same amount in each period.
• D)A change in the interest rate won't affect his saving.
• E)None of the above.

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Definitions:

Lane

A narrow path or track typically designated for a specific purpose, such as driving, cycling, or walking.

Parking Brakes

A secondary braking system used to keep a vehicle stationary, typically employed when the vehicle is parked.

Negligence

A failure to behave with the level of care that someone of ordinary prudence would have exercised under the same circumstances, resulting in unintended harm to others.

Damaging

Damaging refers to causing physical harm, deterioration, or depreciation in value or function.