1. Suppose a bank will pay you a 10% interest rate on your deposits for 1 period. In this case you must sacrifice $10 of current consumption to finance
A. $9 of future consumption
B. $10 of future consumption
C. $11 of future consumption
D. $1 of future consumption
2. One thousand dollars given to you a year from now is worth __________ to you today if the relevant discount rate is 10%.
A. $1,000 B. $1,100 C. $909 D. $900
3. You have $20,000 of current income and $45,000 of future income. The interest rate between the current and future period is 2 percent. What is the maximum amount you could consume in the future?
A. 65,400 B. 69,000 C. 20,400 D. 65,000
4. You have $20,000 of current income and $45,000 of future income. The interest rate between the current and future period is 2 percent. When you allocate consumption optimally between the two periods the marginal rate of time preference between the two periods is
A. -1.02 B. -1.00 C. -1.80 D. 0.80
5. If the demand function for apples is P = 10 - Q, how much consumer surplus does the consumer gain when the price of the apples equals 5?
A. 25 B. 5 C. 20 D. 12.5.