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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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.)
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