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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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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- 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 consumer's lifetime wealth.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?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 spenderWhich of the following results in an increase in consumers’ lifetime wealth, i.e. an increase in the net presentvalue of lifetime income? (a) Increase in interest rate(b) Decrease in future wages(c) Decrease in interest rate(d) Decrease in current taxes, financed by an increase in future taxes
- Use the two-period model from the Appendix to answer this question.Your current income is 40,000. Your next period (future) income is known to be 40,000.If your current consumption expenditure is 32,000, your (current) level of savings S=____(Enter your answer as a whole number.)Bora's income in the current period is y=200, and income in the future period is y'=250. He pays lump-sum taxes t=30 in the current period and t'=10 in the future period. The real interest rate is 5%, per period.Suppose that Bora will always choose current consumption, c and the future consumption, c′ in a constant proportion:c=32c′ a) Determine the optimal current-period and future-period consumption for Bora. b) Determine the optimal saving for Bora, and show this in a diagram with his budget constraint and indifference curves, and also determine if Bora is a lender or a borrower?Eva lives for two periods and wants to have equal consumption in both. Her first period income is $Y subscript 1 and her second period income is $Y subscript 2. The interest rate is 7%. If Y subscript 1 = 81713, and Y subscript Training 2 = 80175, what is her optimal saving?
- A consumer's income in the current period is y = 100 and income in the future period is y'= 120. He or she pays lump-sum taxes t=20 in the current period and t'= 10 in the future period. The real interest rate is 0.1, or 10%, per period. (a) Determine the consumer's lifetime wealth. (b) Suppose that current and future consumptions are perfect complements for the con sumer and that he or she always wants to have equal consumption in the current and future periods. Draw the consumer's indiffer ence curves. (c) Determine what the consumer's optimal current-period and future-period consump tions are, and what optimal saving is, and show this in a diagram with the consumer's budget constraint and indifference curves. Is the consumer a lender or a borrower?Suppose a handbill publisher can buy a new duplicating machine for $500 and the duplicator has a 1-year life. The machine is expected to contribute $550 to the year’s net revenue. What is the expected rate of return? If the real interest rate at which funds can be borrowed to purchase the machine is 8 percent, will the publisher choose to invest in the machine? Explain.Say you define your permanent income as the average income this and the past 4 years’ incomes and you always consume 4/5 of your permanent income. Your earnings record over these years has been: Yt = 40,000 Yt-1 = 38,000 Yt-2 = 34,000 Yt-3 = 32,000 Yt-4 = 31,000 If next year your income increases to Yt+1 = 46,000 by how much will your consumption change between year t and year t+1?
- A college professor is planning for his retirement years. His utility function is ?(?t , ?r ) = 3c t 0.5+2cr0.5 where ct represents his consumption today (period 1), his active years of teaching, and cr represents his consumption in his retirement years (period 2). During his active years of teaching, he makes a total of ₺3 million, while in his retirement years his total income is ₺1 million. He can borrow or lend at an interest rate of 25% between the two periods. Write an equation that describes the professor’s budget assuming he will spend all his income during his lifetime. If the professor chooses neither to borrow nor to lend during his active years, what will be his marginal rate of substitution between his consumption today and his retirement years? If the professor aims at maximizing his utility, how much does he consume in each period (use the Lagrangian method)? Does he save for his retirement years? If so, how much? At what interest rate would the professor…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. Determine each consumer’s current consumption and current saving. Current Consumption: Current Saving: 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 Private Saving Aggregate Consumption Government spending: Current Future Current period government deficit Quantity of debtTrue or false Disposable income is the income that remains to the household for the use of consumption after paying all the taxes.
