QUESTION 8 For the rest of the problem, consider that the economy includes a Pay-As-You-Go retirement system. The Social Security tax equals $1. (You are studying a generation that benefits from the system but is neither the first, nor the last one). What is the amount of retirement benefit paid in the second period? (A) Z = 0.1 (B) Z2 = 1.1 () Z= 0.05 (D) 2 = 1.05 B D QUESTION 9 What is consumption of period 1 and consumption of period 2? C2 = 1.05 i C = 1.955 (A) C = 1 (B) C, = 1.955 (C) C -0.977 (D) C;= 0.977 C2 = 1.955 C2 = 1.075 i A D QUESTION 10 What is saving equal to? (B) (A) Si = 0.023 S, - 1 Si- o (D) S, = 0.045 (c) B Instructions Use the Diamond model to answer all the questions. Suppose an economy is composed of individuals optimizing well being over two periods denoted 1 and 2. Their lifetime pr Ln C1+Ln C2. When they save, they receive an interest rate of 10%. Population grows 5% per year. QUESTION 8 For the rest of the problem, consider that the economy includes a Pay-As-You-Go retirement system. The Social Security tax equals $1. (You are studying a generation that benefits from the system but is neither the first, nor the last one). What is the amount of retirement benefit paid in the second period? (A) Z = 0.1 (B) Z2 = 1.1 () Z= 0.05 (D) 2 = 1.05 B D QUESTION 9 What is consumption of period 1 and consumption of period 2? C2 = 1.05 i C = 1.955 (A) C = 1 (B) C, = 1.955 (C) C -0.977 (D) C;= 0.977 C2 = 1.955 C2 = 1.075 i A D QUESTION 10 What is saving equal to? (B) (A) Si = 0.023 S, - 1 Si- o (D) S, = 0.045 (c) B Instructions Use the Diamond model to answer all the questions. Suppose an economy is composed of individuals optimizing well being over two periods denoted 1 and 2. Their lifetime pr Ln C1+Ln C2. When they save, they receive an interest rate of 10%. Population grows 5% per year