ECON 4400 Midterm: F08_midterm_with_answers.pdf
Document Summary
Write your name and student number at the top of this page. Each question answered is worth 10 points, the total is 40 points. be clear what formulas you use to arrive at a solution, the actual numerical answers are not important. If you think a question is ambiguous or not enough information is provided to answer it, explain why. you have 75 minutes. If the individual is impatient and wishes to spend it on consumption now, implementing the project would require borrowing. ,000 at 20% only to invest it at 10%. If the individual is patient, wishes to consume next year, and would otherwise save the ,000 at market lending rate, investing it in the project with 10% return beats that option. 1: you have no savings today but wish to accumulate wealth over next 40 years and then spend it. Each year, you can either work in a salaried job or manage your savings accumulated up to that year.
