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Suppose a country has an initial external wealth of -50, and it will produce 10 units of output in each of an infinite number of future years. The interest rate is 10%.

a. What is the present value of the country's resources?

b. If the country were to consume a fixed amount every year (including the current year) how much could it consume?

c. What is the maximum that the country could consume in the current year if it were willing to never consume again?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M940977

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