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2005 material - remaining government tax revenue is used...

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ECO 320L HW #1 Due September 21, 2005 1. Chapter 2, Review Questions 4 and 7, and Numerical Problems 3, 5, and 6. 2. Assume that there are two types of people in the economy: the young and the old. The young works and produces 10 goods. The old is retired and does not produce any output. The government taxes the young. The tax paid by the young is 4 goods. The government gives 2 goods to the old as social security benefits. The
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Unformatted text preview: remaining government tax revenue is used for government purchases of goods and services. The interest on government debt is zero. a. Calculate private disposable income for the young, the old, and for the whole economy. b. What is net government income? What is government saving? Is the government running a deficit or surplus?...
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