EconomicsSuppose an individual lives two periods, 0 and 1.With income of 3000 at period 0 and 1000 atperiod of 1. preference is given by U(CO,C1) =InCO + 0.8lnC1. The market interest rate is 10percent. So, the individual spends___ dollars atperiod 0 and dollars at period 1 forconsumption. If now the government levies 25percent marginal tax on capital income fromsaving. Then the individual spends___ dollars atperiod 0 and _____dollars at period 1, and thegovernment tax revenue is dollars.Please fill the blanks.

The equation U(C0, C1)=lnC0+0.8lnC1, which refers to the equation, can be used to express a person's…

Answered: Suppose an individual lives two…

Suppose an individual lives two periods, 0 and 1 With income of 3000 at period 0 and 1000 at period of 1. preference is given by U(CO,C1) = =

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Economics
Suppose an individual lives two periods, 0 and 1.
With income of 3000 at period 0 and 1000 at
period of 1. preference is given by U(CO,C1) =
InCO + 0.8lnC1. The market interest rate is 10
percent. So, the individual spends___ dollars at
period 0 and dollars at period 1 for
consumption. If now the government levies 25
percent marginal tax on capital income from
saving. Then the individual spends___ dollars at
period 0 and _____dollars at period 1, and the
government tax revenue is dollars.
Please fill the blanks.

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