1. You plan to work for four more years. At the beginning of 2025, you leave for Mars for the rest of your life as part of a science experiment, so you only care about what happens from 2021 to 2024 when making your decisions.

You have the following expectations for income: $60,000 in 2021, $65,000 in 2022, $70,000 in 2023, and $75,000 in 2024.

a. What is your lifetime income?

b. You prefer consumption smoothing. Calculate your preferred consumption amounts in each year. You need to provide an amount for each year. Your answer needs to be clear in order to get points.

c. You have no savings. How much would you have to borrow to achieve your preferred consumption in 2021?

d. The government wants to stimulate the economy, so it enacts a policy of sending $1200 checks to everyone in 2021. It will be paid for by increasing taxes by $400 each year for 2022-2024. How much do you change your consumption in each year in response to this fiscal policy?