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MMMU-Pro / test_Economics_93 / <image 1> Crusoe begins with an endowment A. Point R is the consumption…

Problem

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question

<image 1> Crusoe begins with an endowment A. Point R is the consumption combination he would choose at real interest rate r and point R' is the consumption combination he would choose at real interest rate r'. Which of the following statements is true?

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options

  1. Crusoe is a lender today.
  2. Crusoe's choice of consumption combination is independent of the real interest rate.
  3. Crusoe's wealth has decreased because of the change in the real interest rate.
  4. The marginal rate of intertemporal substitution at R is equal to r'.
  5. The change in interest rate does not decrease Crusoe's utility since he is free to keep his original endowment A if he so chooses.
  6. The marginal rate of intertemporal substitution at R is equal to r.
  7. Crusoe's wealth has increased because of the change in the real interest rate.
  8. The change in interest rate increases Crusoe's utility since he can choose to keep his original endowment A.
  9. The real interest rate is directly proportional to Crusoe's utility.
  10. Crusoe is a borrower today.

subject

Economics
image_1.png

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