Author Question: An intertemporal budget constraint A) requires the present value of consumption to be equal to ... (Read 86 times)

lidoalex · **on:** Jun 30, 2018

An intertemporal budget constraint

A) requires the present value of consumption to be equal to the present value of production.
B) requires total spending in each period to be equal to total consumption in each period.
C) does not take into account the ability to borrow or loan goods domestically.
D) categorizes income into permanent and temporary income.
E) limits consumption to the amount produced in each time period.

Question 2

Explain why the FDIC is following a too-big-to-fail policy of fully protecting all depositors at the largest banks.

What will be an ideal response?

honnalora · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

A

Answer to Question 2

A tricky question. The FDIC does that although, officially, it still applies only to the 100,000 limit. Probably, the idea is that the cost to one depositor is unbearable relative to the small cost we all need to pay as a collective. Also, there are the issues of political pressure and avoiding blaming the government for mismanaging the safe guards.