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.
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.
Chapter17: Federal Deficits, Surpluses, And The National Debt
Section17.3: Why Worry Over The National Debt?
Problem 1YTE
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