To be specific assume we have the two-period modelnbspgraph

Reference no: EM13397028

To be specific, suppose we have a two-period model. An individual earns labor income Y₀ =$100k at time zero, and earns no labor income at time 1. The individual may consume or save that income. Savings grow at rate r=.03. For every dollar of consumption, the individual pays the tax rate τ=.30 to the government.

a. Graph the two-period budget constraint for consumption. What is the slope? Is this tax distortionary?

b. The government modifies the consumption tax somewhat so that the first $20k of consumption in each period is tax free. Now graph the budget constraint.

Reference no: EM13397028

Questions Cloud

Select three internal influences in consumer behavior and : select three internal influences in consumer behavior and analyze the impact that these influences have on the

Mohoney sales employs straight line method to amortize bond : on january 2 2014 mahoney sales issued 10000 in bonds for 9400. they were 5-year bonds with a stated rate of 4 and pay

A study of long term phone calls made from general : 1.a study of long term phone calls made from general electricss corporate headquarters in fairfeild conneticuit

As a financial consultant you have contracted with wheel : as a financial consultant you have contracted with wheel industries to evaluate their procedures involving the

To be specific assume we have the two-period modelnbspgraph : to be specific suppose we have a two-period model. an individual earns labor income y0 100k at time zero and earns no

Describe the cfos proposed solution in your discussion : assume you work as an assistant accountant in the head office of a national movie rental business a la blockbuster inc.

There are some people say budgets are not good for control : nbsp this will be the foundation for future discussions by your classmates. be substantive and clear and use examples

Star corporation issued both common and preferred stock : star corporation issued both common and preferred stock during 20x6. the stockholders equity sections of the companys

Project c has two irrs 0 and 100 what is a reasonable : project c has two irrs 0 and 100 what is a reasonable conclusion?a. c is better than a or b for discount rates between

User Account

All Pages