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Combine the two budget constraints into a single lifetime budget constraint.

Endowment Equilibrium and Fiscal Policy Suppose that we have an economy with many identical households. There is a government that exogenously consumes some output ( and ) and pays for it with lump-sum taxes ( and ) or debt (). Lifetime utility for a household is:

What are the significant implications of Rational Expectations? Name at least one.

Graphically depict the optimality condition. Carefully label the intercepts of the budget constraint. What is the slope of the indifference curve at the optimal consumption basket,

Graphically depict the equilibrium of the economy using the five-part graph. Suppose that there is an increase in . Show how and react to the increase in . (Use Desmos to answer this question.)

Suppose the second-period consumption is taxed at a rate

What does “Invisible Hand” mean, and who brought this concept?

What are the problems with Classical economics? Name at least one.

Researcher James-Roberts studied infant crying and found that, compared to infant-demand method, traditional method (i.e., not responding to an infant’s every cry) leads to _______ during the first three months, but _______ after that.

Baby Sally’s parents use the Ferber method to put her to bed/sleep. “Ferber method” refers to: