In the Two-Period Model, Suppose a Household's Income in the First

question 40

Multiple Choice

In the two-period model, suppose a household's income in the first period is $30,000, income in the second period is $60,000, and the real interest rate is 30 percent.What is the household's maximum spending in the second period, if it decides to save the entire amount in the first period?

• A)$40,000
• B)$50,000
• C)$80,000
• D)$99,000

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Definitions:

Anaerobic Respiration

A form of respiration using electron acceptors other than oxygen. It often occurs in bacteria and in muscle cells where oxygen is scarce.

Aerobic Respiration

The process by which cells convert glucose and oxygen into energy, carbon dioxide, and water.

Chemical Pathway

A series of chemical reactions occurring within a cell that lead to the production of a certain substance or a change in the cell.

Anaerobic Respiration

Anaerobic respiration is a process by which cells produce energy without the need for oxygen, through fermentation or other means.