minideeri
minideeri
16.04.2020 • 
Business

Assume an economy with 1,000 consumers. Each consumer has income in the current period of 30 units and future income of 40 units and pays a lump-sum tax of 5 in the current period and 10 in the future period. The market real interest rate is 5%. Of the 1,000 consumers, 400 consume 20 units in the current period while 600 consume 35 units in the current period.

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

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