+1-415-315-9853

info@mywordsolution.com

## Economics

 Basic Economics Macroeconomics Microeconomics Business Economics Econometrics International Economics Managerial Economics Game Theory Public Economics

Suppose Frank will earn \$1 M during his working life and must decide how to spread that between consumption during his working life (Cp) and consumption during retirement (Cf). Assume that the real interest rate between the two periods is 100% and that both Cp and Cf are normal goods.
(a) prepare out the equation for Frank's budget line and illustrate it in a diagram with Cp on the horizontal axis and Cf on the vertical axis. What is the relative price of Cp? Identify it on your diagram.
(b) Suppose Frank chooses to consume \$0.5 M during his working life. How much does he save? What is Cf? Illustrate this choice with an indifference curve and identify the level of saving.
(c) Suppose that the government decides to tax away all interest income, so that the real after-tax rate of interest between the two periods falls to 0%. Illustrate the new budget line in your diagram. Suppose Frank still chooses to consume \$0.5 M during his working life. Illustrate this choice with an indifference curve. What does this choice tell you about the income and substitution effects of the change in the interest rate with respect to Cp?
(d) Show that Frank would prefer that the government not tax interest income but rather tax his current earnings by \$0.25 M.
(e) Go back to the original situation of parts (a) and (b). Now suppose the government institutes a mandatory public pension plan that has Frank paying a "contribution" of_ \$0.25 M today, but with a promise of receiving a "benefit" of \$0.5 M in the future. Is he made better off? What happens to his amount of private saving.

Microeconomics, Economics

• Category:- Microeconomics
• Reference No.:- M945719

Have any Question?

## Related Questions in Microeconomics

### The purpose of an assignment is to ensure that the learner

The purpose of an assignment is to ensure that the Learner is able to: - Use methods of enquiry and research in a disciplined field. - Interpret and evaluate text. - Have a sound understanding of key principles and theor ...

### Assignment discussion-applying balanced scorecardin many

Assignment: Discussion-Applying Balanced Scorecard In many cases, managers end up in trouble as they direct their focus exclusively on cost savings. Cost cutting is always emphasized, but other impacts, such as decreased ...

### Assignment multiyear plans and Assignment: Multiyear Plans and Analysis Preparation •

Assignment: Multiyear Plans and Analysis Preparation • Review the document titled "City of Charlottesville 2010 Annual Comprehensive Plan" located in the course shell. Write a three to four (3-4) page paper in which you: ...

### Assignment 1 -i watch the videos on demand and supplythere

Assignment 1 - I) Watch the videos on Demand and Supply There are 5 changes in Demand that shift the demand curve to the right or left.  They are Change in Tastes and Preferences Change in Income Change in Population Cha ...

### Micro economics paperyou have been given the responsibility

Micro Economics Paper You have been given the responsibility of working with your organization's CEO to do a competitive market analysis of the potential success of one of their existing products. Select your organizatio ...

### Assignmentin the article at the beginning of the readings

Assignment In the article at the beginning of the readings book, Aronson talks about Social Psychology as a leap of faith, and about the imperfect nature of social psychological experiments (which is true of science in a ...

### Can you write a great paper on a research economic topic10

Can you write a great paper on a Research economic topic 10 page paper Including abstract, introduction, content and conclusion, reference. You can choose any economic topics and analyze the issue from your own perspecti ...

### Introduction to economic evaluation of health promotion

Introduction to Economic Evaluation of Health Promotion Interventions Assignment Evaluating Cost-effectiveness using Markov cohort models: The HPV case The goal of this assignment is to provide students with applied prac ...

### Economics assignment1 multiple product pricinganswer the

Economics Assignment 1. Multiple Product Pricing: Answer the following about the pricing of multiple products: a. Icarus Medical Supplies produces adhesives that are used to reassemble broken bones. Pindrop Medical Produ ...

• 13,132 Experts

## Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

### WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

### Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

### Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

### Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

### Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro