Macroeconomics 314
Assignment 3
Numerical Problems:
1.
a.
1.1(50,000-Cd)-12600+50,000-Cd=0
Cd=44,000
She should consume $44,000 each year.
Sd=income-Cd
Sd=50,000-44,000=6,000
She should save $6,000 this year.
b.
1.1(54,000-Cd)-12600+54,000-Cd=0
Cd=48,000
She should consume $48,000 each year.
Sd=54,000-48,000=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(50,000-Cd)-12600+54,200-Cd=0
Cd=46000
She should consume $46,000 each year.
Sd=50,000-46,000=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+1050-Cd)-12600+50,000-Cd=0
Cd=44,550
She should consume $44,550 each year.
Sd=51,050-44,550=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(50,000-Cd)-14,700+50,000-Cd=0
Cd=43,000