Consider an overlapping generations model. Suppose population grows at a 2% rate, and wage grows at a 6% rate. Generation 2 has 500 people, who have an average salary of $30,000, and everyone pays 8% of their income to generation 1. What is the total amount generation 2 pays to generation 1?If generation 3 pays generation 2 the same dollar amount gen-eration 2 paid generation 1, what percentage of their income dothey pay?

The overlapping generations model assumes that new people are born in every period, live for some…

Answered: Consider an overlapping generations…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter20: Economic Growth

Section: Chapter Questions

Problem 4SCQ: Assume there are two countries: South Korea and the United States. South Korea grows at 4 and the...

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Consider an overlapping generations model. Suppose population grows at a 2% rate, and wage grows at a 6% rate. Generation 2 has 500 people, who have an average salary of $30,000, and everyone pays 8% of their income to generation 1.

What is the total amount generation 2 pays to generation 1?
If generation 3 pays generation 2 the same dollar amount gen-
eration 2 paid generation 1, what percentage of their income do
they pay?

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