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Assume that an adult is making a consumption plan and anticipates a life of 40 more years,

Assume that an adult is making a consumption plan and anticipates a life of 40 more years, 30 of which will be spent in work and 10 in retirement. 1. If income during the working years is $50,000, and the endowment of initial assets is zero, what will annual consumption expenditures be during the working years? During the retirement years? 2. What will be the average propensity to consume (C/Y) during the working years? 3. Now, assume instead that initial assets are $200,000. What will annual consumption expenditures be during the working years? During the retirement years? 4. What will be the average propensity to consume during the working years?

Nov 29 2019 View more View Less

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