I only assigned Section 10.1 of Chapter 10, just to introduce you to the notation for more than 2 time periods. The message of the PIH persists to more than two periods, of course. Consider a person making financial decisions over four periods–and think of each period as a decade. People don’t discount the future (so beta = 1), and fortunately for us the real interest rate (r) is always zero.  Utility from consumption each period is square root.  For each period (decade), total income is as follows: Yt = 0 Yt+1 = 100 Yt+2 = 300 Yt+1 = 200 For this person, what is optimal consumption each period?

In Pissarides’s view of labor markets, the focus is on finding a good ________. 

What’s one way to summarize the Modigliani-Miller theorem? 

If the substitution effect of higher wages always outweighs the income effect, and workers are always on their labor supply curve, what happens to total labor inputs (N) as wages rise over time? 

What type of Valve is represented below?

Kling thinks that the Law of Demand can be disproven with a counterexample. 

A consumer can borrow or lend freely at the market interest rate of r=100% per period.   Her utility function is: U = ln(ct) + (1/2)ln(ct+1) She earns Yt=100 and Yt+1=100. But in period t+1 she will have to pay a tax of Tt+1=40.  If she’s maximizing her utility function subject to the IBC, how much will she consume in period t? 

What are 2 common occurrences in patients presenting with endocarditis. 

The Modigliani-Miller Theorem suggests that in certain cases

In a two-period world, the government has committed to never using seignorage to repay the debt, so only taxes and government purchases matter for the intertemporal government budget constraint. In this country, the constitution says that taxes = T = 150 each period, and current government purchases are 250 now. The interest rate (r) is 40% (as usual, think of a big interest rate like this as a generational interest rate if you find that helpful). What will government purchases be in the second period?  Answer with a number: If you think the answer is 400, just write 400 as usual.