Draw a two period budget line where the borrow/lending rate of interest, r, allows consumers to choose consumption in each of the two periods. C1 and C2 given their anticipated income on two periods, Y1 and Y2 . The vertical (C2) intercept is

Suppose that the United Kingdom pegs the pound to the euro. If all other things remain unchanged, what would you expect to happen to European interest rates if all countries who use the euro decided to adopt expansionary fiscal policies?

A) They would rise. B) They would fall. C) They would not change. D) That cannot be determined using the information provided.

FasterChip, Inc is considering five alternative techniques for assembling personal computers. The table shows the amounts of labor and capital required by each of these techniques to make 10 computers a day

Labor costs $15 an hour and capital costs $100 a unit. a) Which techniques are technologically efficient and which are not? Explain your answer. b) Which technique is economically efficient? Explain. c) If FasterChip uses its plant in Mexico, it can lower the labor cost to $10 an hour. Which technique will the company use in Mexico? Explain.