Question: Need help with this Consider the special case solved in the lecture where 5 = 1 and utility takes the log form. Suppose the real

Need help with this

Need help with this Consider the special case solved in the lecture

Consider the special case solved in the lecture where 5 = 1 and utility takes the log form. Suppose the real interest rate is 5%. A middle-aged college professor contemplating retirement: his current income is Y1 = $150, 000 and his future income is Y2 = $10, 000. (a) What is the college professor's present value of income? (b) According to the neoclassical model, how much does the college professor consume to- day and in the future? How much does the college professor save today? (c) If Y1 rises by $20, 000, by how much will saving change? ((1) By how much does consumption today rise if Y2 rises by $10, 000? (e) If the interest rate rises to 10%, by howr much do present value of income and today's consumption change? By how much does saving change? (f) Would this matter if the professor could not borrow

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