[For Q4 – Q5] Consider the following lifecycle model of consumption. Minjoon has 50 years of life remaining. He plans to work 30 more years from now and then retire. He earns $1,000 per year while he is working and has $200 per year pension income after retirement. He currently has $1,000 of savings. He wants equal consumption every year. The interest rate is zero. Q4. What will be Minjoon's wealth at the moment of retirement? Answer: a) $1,000. b) $3,000. c) $5,000. d) $10,000. Q5. Which of the following statements regarding this lifecycle model is (are) correct? I. If the income while working increases from $1,000 per year to $1,100 per year, Minjoon's optimal consumption before retirement will increase by $60 per year. II. Minjoon will decrease his consumption at the moment of retirement because he will have less income after his retirement. Answer: a) None of the above. b) I only. c) II only. d) I and II.
[For Q4 – Q5] Consider the following lifecycle model of consumption. Minjoon has 50 years of life remaining. He plans to work 30 more years from now and then retire. He earns $1,000 per year while he is working and has $200 per year pension income after retirement. He currently has $1,000 of savings. He wants equal consumption every year. The interest rate is zero. Q4. What will be Minjoon's wealth at the moment of retirement? Answer: a) $1,000. b) $3,000. c) $5,000. d) $10,000. Q5. Which of the following statements regarding this lifecycle model is (are) correct? I. If the income while working increases from $1,000 per year to $1,100 per year, Minjoon's optimal consumption before retirement will increase by $60 per year. II. Minjoon will decrease his consumption at the moment of retirement because he will have less income after his retirement. Answer: a) None of the above. b) I only. c) II only. d) I and II.
Calculus: Early Transcendentals
8th Edition
ISBN:9781285741550
Author:James Stewart
Publisher:James Stewart
Chapter1: Functions And Models
Section: Chapter Questions
Problem 1RCC: (a) What is a function? What are its domain and range? (b) What is the graph of a function? (c) How...
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![[For Q4 – Q5] Consider the following lifecycle model of consumption. Minjoon has 50 years of life
remaining. He plans to work 30 more years from now and then retire. He earns $1,000 per year while he
is working and has $200 per year pension income after retirement. He currently has $1,000 of savings.
He wants equal consumption every year. The interest rate is zero.
Q4. What will be Minjoon's wealth at the moment of retirement?
Answer:
a) $1,000.
b) $3,000.
c) $5,000.
d) $10,000.
Q5. Which of the following statements regarding this lifecycle model is (are) correct?
I. If the income while working increases from $1,000 per year to $1,100 per year, Minjoon's optimal
consumption before retirement will increase by $60 per year.
II. Minjoon will decrease his consumption at the moment of retirement because he will have less income
after his retirement.
Answer:
a) None of the above.
b) I only.
c) II only.
d) I and II.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F25ea2dce-7d0b-4c76-9e74-34c06034f7db%2F41372d15-26bf-4585-bedc-d331975c3868%2F33l7lu_processed.png&w=3840&q=75)
Transcribed Image Text:[For Q4 – Q5] Consider the following lifecycle model of consumption. Minjoon has 50 years of life
remaining. He plans to work 30 more years from now and then retire. He earns $1,000 per year while he
is working and has $200 per year pension income after retirement. He currently has $1,000 of savings.
He wants equal consumption every year. The interest rate is zero.
Q4. What will be Minjoon's wealth at the moment of retirement?
Answer:
a) $1,000.
b) $3,000.
c) $5,000.
d) $10,000.
Q5. Which of the following statements regarding this lifecycle model is (are) correct?
I. If the income while working increases from $1,000 per year to $1,100 per year, Minjoon's optimal
consumption before retirement will increase by $60 per year.
II. Minjoon will decrease his consumption at the moment of retirement because he will have less income
after his retirement.
Answer:
a) None of the above.
b) I only.
c) II only.
d) I and II.
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