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:

Primarily Rental

A classification for a property used mainly for rental purposes, affecting tax treatment and deductions.

Plumbing Repair

Refers to the services and actions taken to fix, maintain, or install water, gas, and sewage systems in residential or commercial properties.

Rental Income

Revenue generated by leasing property or equipment.

Primarily Rental

Pertaining to the use of property mainly for rental purposes, which may affect the tax treatment of income and expenses related to the property.