Answer to Question #251713 in Macroeconomics for Apple

Question

Use again the model from Chapter 3 to answer this multiple choice problem.  If the household's initial asset position is positive, B∗0>0, then the initial endowment (Q₁,Q₂) is located ______________________ the intertemporal budget constraint (IBC) and this in turn implies that it is ______________________ for the household to consume its endowment in each period; C₁=Q₁ and C₂=Q2.

(a) above; feasible (affordable)

(b) above; not feasible (not affordable)

(c) below; feasible (affordable)

(d) below; not feasible (not affordable)

(e) None of the above

Answer 1

a) above; feasible(affordable)