What are consumption and saving in each period

Reference no: EM13178582

A consumer lives three periods, called the learning period, the working period, and the retirement period. Her income is 200 during the learning period, 800 during the working period, and 200 again during the retirement period. The consumer's initial assets are 300. The real interest rate is zero. The consumer desires perfectly smooth consumption over her lifetime

a. What are consumption and saving in each period, assuming no borrowing constraints? What happens if the consumer faces a borrowing constraint that prevents her from borrowing?
b. Assume that the consumer's initial wealth is zero instead of 300. Repeat part (a). Does being borrowing-constrained mean that consumption is lower in all three periods of the consumer's life than it would be if no borrowing constraints applied?

Reference no: EM13178582

Questions Cloud

What is the maximum profit : How may switches of each type should be produced in order to maximize profit? What is the maximum profit?

Describes the j curve : Which of the following best describes the J curve?

How much of an epoxy that has a weight per epoxy is needed : How much of an epoxy that has a "weight per epoxy" of 435 in 80% solid solution is needed for the same reaction?

What is area of one triangular face of the lateral surface : The surface area of a pyramid is 189cm squared. The area of the sq base is 49cm squared. What is the area of one triangular face of the lateral surface?

What are consumption and saving in each period : What are consumption and saving in each period, assuming no borrowing constraints? What happens if the consumer faces a borrowing constraint that prevents her from borrowing?

What are the standards of proof in criminal cases : What are the standards of proof in criminal cases? what is the relaitonship between stardards of proff in criminal justice cases and the adversarial system? what wold happen if the standards of proof were not included?

Explain briefly four kinds of batteries : Describe briefly four types of batteries. In your description, include the redox reactions

Find the shortest length of cable needed : a steep mountain is inclined 79 degrees to the horizontal and rises 3100 ft. above the surrounding plain. a cable car is to be installed from a point 900ft from the base of the mountain. find the shortest length of cable needed?

Find the amount of interest and the interest rate : James borrows $12,000 for equipment so that he could do some of his personal training work in his garage. He agreed to repay $13,200 after 300 days. Find the amount of interest and the interest rate.

User Account

All Pages