Assume an economy with 1,000 consumers.Each consumer has income in the currentperiod of 50 units and future income of 60units and pays a lump-sum tax of 10 units inthe current period and 20 units in the futureperiod. The market real interest rate is 8%. Ofthe 1,000consumers, 500 consumer 60 unitsin the future, while 500 consumer 20 units inthe future.a) Determine each consumer's currentconsumption and current saving.(b) Determine aggregate private saving,aggregate consumption in each period,government spending in the current andfuture periods, the current-periodgovernment deficit, and thequantity of debtissued by the government in the currentperiod.(c) Suppose that current taxes increase to 15units for each consumer. Repeat parts (a)and(b) and explain your results.

A) Each consumer’s current consumption and current saving. There are two sorts of individuals,…

a) consumption and current saving. (b) Determine aggregate private saving, aggregate consumption in each period, government spending in the current and future periods, the current-period government deficit, and thequantity of debt issued by the government in the current period. (c) Suppose that current taxes increase to 15 units for each consumer. Repeat parts (a)

a) consumption and current saving. (b) Determine aggregate private saving, aggregate consumption in each period, government spending in the current and future periods, the current-period government deficit, and thequantity of debt issued by the government in the current period. (c) Suppose that current taxes increase to 15 units for each consumer. Repeat parts (a)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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