1. A consumer's income in the current period is y=200, and income in the future period is...
No answer yet for this question.
Ask a Tutor
Question:
1.A consumer's income in the current period is y=200, and income in the future period is y'=240. He or she pays lump-sum taxes t=10 in the current period and t'=15 in the future period. The real interest rate is 0.2 per period (20%). Assume that the 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.
a.Calculate the consumer's lifetime wealth.
b.Calculate the optimal current and future consumption and savings. Is the consumer a lender of a borrower?
c.Draw a diagram to illustrate the consumer's budget constraint, indifference curve, endowment point, and optimal consumption bundle in your answer to part b.
Posted Date: