Macroeconomics 314
Assignment 3
Numerical Problems:
1.
a.
1.1(50,000Cd)12600+50,000Cd=0
Cd=44,000
She should consume $44,000 each year.
Sd=incomeCd
Sd=50,00044,000=6,000
She should save $6,000 this year.
b.
1.1(54,000Cd)12600+54,000Cd=0
Cd=48,000
She should consume $48,000 each year.
Sd=54,00048,000=6,000
She should save $6,000 this year.
The amount she should consume increases by $4000, while the amount
she should save this year remains constant.
c.
1.1(50,000Cd)12600+54,200Cd=0
Cd=46000
She should consume $46,000 each year.
Sd=50,00046,000=4,000
She should save $4,000 this year.
The amount she should consume increases by $2000, while the amount
she should save this year decreases by $2000.
d.
1.1(50,000+1050Cd)12600+50,000Cd=0
Cd=44,550
She should consume $44,550 each year.
Sd=51,05044,550=6,500
She should save $6,500 this year.
The amount she should consume increases by $550, while the amount she
should save this year increases by $500.
e.
1.1(50,000Cd)14,700+50,000Cd=0
Cd=43,000
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View Full DocumentShe should consume $43,000 each year.
Sd=50,00043,000=7,000
She should save $7,000 this year.
The amount she should consume decreases by $1000, while the amount
she should save this year increases by $1000.
f.
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 Fall '07
 MBIEKOP
 Macroeconomics, rental rate, National Savings, national savings increase

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