Question

In the simple ________ model of consumption, we consider a(n) ________ period lifetime.

a. Marxian; one

b. neoclassical; two

c. constant rate of risk aversion; T

d. Stone-Geary; infinite

e. Keynesian; one

In the intertemporal budget constraint, wealth is equal to:

a. financial plus “human” wealth.

b. lifetime income.

c. savings held in stocks and bonds.

d. the overall stock of assets held by future generations.

e. financial wealth.

Which of the following represents human wealth?

a. the level of educational attainment

b. the total stock of assets owned

c. the value of savings

d. skills gained over time

e. the present value of labor income

Answer 1

Answer 1. Neoclassical ,two

Reason

neoclassical model states that there are two periods present and future in which the whole consumption takes place.

Answer 2. a. financial plus “human” wealth.

Reason

wealth is equal to financial wealth and human wealth. we earn financial wealth due to human wealth

Answer 3. e. the present value of labor income

Reason

Human wealth means the present value of labor income. Higher is the value of labor, higher will be the school.