Consumption and the real interest rate: according to the life-cycle / permanent-income hypothesis, consumption depends on the present discounted value of income. an increase in the real interest rate will make future income worth less, thereby reducing the present discounted value and reducing consumption. to incorporate this channel into the model, suppose the consumption equation is given by ct = ¯acy¯ tbc(rt − r¯)y¯ t a) derive the is curve for this new specification. b) how and why does it differ from the original is curve?

Which of the following is a problem for the production of public goods?

Exercise 18-15 sheffield appliance center is an experienced home appliance dealer. sheffield appliance center also offers a number of services for the home appliances that it sells. assume that sheffield appliance center sells ovens on a standalone basis. sheffield appliance center also sells installation services and maintenance services for ovens. however, sheffield appliance center does not offer installation or maintenance services to customers who buy ovens from other vendors. pricing for ovens is as follows. oven only $790 oven with installation service 850 oven with maintenance services 970 oven with installation and maintenance services 990 in each instance in which maintenance services are provided, the maintenance service is separately priced within the arrangement at $180. additionally, the incremental amount charged by sheffield appliance center for installation approximates the amount charged by independent third parties. ovens are sold subject to a general right of return. if a customer purchases an oven with installation and/or maintenance services, in the event sheffield appliance center does not complete the service satisfactorily, the customer is only entitled to a refund of the portion of the fee that exceeds $790. assume that a customer purchases an oven with both installation and maintenance services for $990. (b) indicate the amount of revenue that should be allocated to the oven, the installation, and to the maintenance contract.

When you hire an independent contractor you don't have to pay the contractors what