Determine aggregate private savings nd aggregate consumption

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Reference no: EM13234883

Assume an economy with 1000 consumers. Each consumer has income in the current period of 50 units and future income of 60 units and pays a lump-sum tax of 10 in the current period and 20 units in the future period. The market real interest rate is 8%. Of the 1000 consumers, 500 consume 60 units in the future, while 500 consume 20 units in the future.

Determine aggregate private savings, aggregate consumption in each period, government spending in the current and future periods and the current-period government deficit.

Reference no: EM13234883

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