Assume that Clem is an individual who has current income of $26.898 and expected future income of $59 968. They have only $6.295 in current wealth and expect $21,031 in future weaith If Clem decides he wants to consume twice as much in period two than in period one and faces a real interest rate of 3.4% for both borrowing and saving, answer the following questions 1. What is the optimal level of consumption in perlod one? Round to 2 decimal places. Do not add in the dollar sign. Be sure to add a negative sign il needed. 2. What is the optimal level of consumplion in perlod two? Round to 2 decimal places. Do not add in the dollar sign. Be sure to add a negative sign if needed.

Assume that Clem is an individual who has current income of $26.898 and expected future income of $59 968. They have only $6.295 in current wealth and expect $21,031 in future weaith If Clem decides he wants to consume twice as much in period two than in period one and faces a real interest rate of 3.4% for both borrowing and saving, answer the following questions 1. What is the optimal level of consumption in perlod one? Round to 2 decimal places. Do not add in the dollar sign. Be sure to add a negative sign il needed. 2. What is the optimal level of consumplion in perlod two? Round to 2 decimal places. Do not add in the dollar sign. Be sure to add a negative sign if needed.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter17: Capital And Time

Section: Chapter Questions

Problem 17.2P

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Suppose a person lives for 4 periods. His salary during each period of his life is $30, $60, $90 and $0. He was born without any financial wealth. 1. If the interest rate is 8% per period, what is the present value of the income of this agent? 2. If the individual wishes to have a constant consumption during his life, what will it be? Deduct his level of savings during each of the 4 periods of his life. 3. Suppose our individual cannot borrow (but can save). Determine the consumption and savings profile of the individual. 4. Suppose our individual receives an inheritance at birth of $10. How your answer in c) be affected?
Assume an economy with 600 consumers. Each consumer has income in the current period of 70 units and future income of 80 units and pays a lump-sum tax of 10 in the current period and 25 in the future period. The market real interest rate is 12%. Of the 600 consumers, 400 consume 70 units in the future, while 200 consume 20 units in the future. a. Determine each consumer's current consumption and current saving. For the group of consumers that consume 70 units in the future, current consumption is and current saving is For the group of consumers that consume 20 units in the future, current consumption is, and current saving is (Round to two decimal places as needed.)
If consumers spend of a change in their disposable income, then a tax increase of $100 would lower saving by $40. O 20 percent 40 percent O 60 percent O 80 percent 70 percent
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assume elsa has current income of $50000 and expects income of $60000 next period. interest rate is 6% elsa desires to have the same amount of consumption expenditure during both periods. in the two period certainty framework, determine how much elsa's expenditures are during each period is elsa a saver or spender
Assume an economy with 1000 consumers. Each consumer has income in the current period of 50 units and future income of 60 units and pays a lump-sum tax of 10 in the current period and 20 in the future period. The market real interest rate is 8%. Of the 1000 consumers, 500 consume 60 units in the future, while 500 consume 20 units in the future. a. Determine each consumer's current consumption and current saving. For the group of consumers that consume 60 units in the future, current consumption is 21.48, and current saving is 18.52. For the group of consumers that consume 20 units in the future, current consumption is 58.52, and current saving is -18.52 (Round to two decimal places as needed.) b. Determine aggregate private saving, aggregate consumption in each period, government spending in the current and future periods, the current-period government deficit, and the quantity of debt issued by the government in the current period. Aggregate consumption in the current period is…
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A consumer's current income (y) is 200 and the future income ( t.') is 240. A current lump sum tax (t) of 10 is paid and the tax in the next period (t) is 15. The real interest rate is 20% for each period. Please assume that current and future consumption are complements. and the consumer always prefers to have one unit of current consumption and two units of consumption in the future. Calculate the optimal current and future consumption and the optimal current and future savings. Is the consumer a lender or a borrower? How does he she. as a lender or a borrower. affect the future consumption?
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4. Mateo is deciding how many dollars to consume today and how many to consume next week. We earns $1,000 each week and earns a real interest rate of p = 0.01 on any money saved today. He also needs to pay the same interest rate if he borrows money today and repays it next week. If his utility function is U (C₁, C₂) = cc₂, where c₁ is units of consumption today and c₂ is units of consumption next week, how many units will he consume this week?