Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
1. Gruber chapter 13 question 17 Consider an economy that is composed of identical individuals who live for two periods. These individuals have preferences over consumption in periods 1 and 2 given by U = ln(C1) + ln(C2). They receive an income of 100 in period 1 and an income of 50 in period 2. They can save as much of their income as they like in bank accounts, earning an interest rate of 10% per period. They do not care about their children, so they spend all their money before the end of period 2. Each individual's lifetime budget constraint is given by C1 + C2/(1 + r) = Y1 + Y2/(1 + r). Individuals choose consumption in each period by maximizing lifetime utility subject to this lifetime budget constraint.
a. Illustrate what is the individual's optimal consumption in each period? Explain how much saving does he or she do in the first period?
b. Now the government decides to set up a social security system. This system will take $10 from each individual in the first period, put it in the bank, and transfer it to him or her with interest in the second period. Write out the new lifetime budget constraint. How does the system affect the amount of private savings? How does the system affect national savings (total savings in society)? What is the name for this type of social security system?
c. Suppose instead that the government uses the $10 contribution from each individual to start paying out benefits to current retirees (who did not pay in to a social security when they were working). It still promises to pay current workers their $10 (plus interest) back when they retire using contributions from future workers. Similarly, it will pay back future workers interest on their contributions using the contributions of the next generation of workers. An influential politician says: "This is a free lunch: we help out current retirees, and current and future workers will still make the same contributions and receive the same benefits, so it doesn't harm them, either." Do you buy this argument? If not, what is wrong with it?
Assume that the marginal cost of providing lockers is zero as well as the monthly demand as well as for lockers is estimated to be best described.
An equal number of consumers who have a willingness to pay of $119 are allowed to buy the good at a price of $99. How will consumer surplus be affected.
WSJ's Justin Lahars reports that counties throughout the U.S. have seen employment declines that can be attributed to the importing of inexpensive goods from China.
Little Kona is a small coffee company that is considering entering a marketplace dominated by Big Brew.
Decrease will have on the desired proportions of capital and labor used in producing the given level of output at minimum total cost.
Explain how do you calculate the cost index using the nominal GDP to get the real GDP in billions
What is the difference between the index number for the year you were born and the Consumer Price Index for January of 2012.
You complain that the current labor contract specifies a full hour for your lunch break and you still have over 15 minutes left.
This question uses the general monetary model, where L is no longer assumed constant.
Explain why might it be appropriate for the government to allow a pharmaceutical company to have a monopoly in the production of a drug.
If lots of people want Euros also Euros are in short supply also a few people want Japanese yen also yen are in plentiful supply the euro is likely to.
how the economy moves to a new equilibrium. Focus on short-run as well as long-run equilibrium.
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd