Problem #1 Imagine that the preferences of consumers living in an OLG economy are represented with...
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Problem #1 Imagine that the preferences of consumers living in an OLG economy are represented with U (C, C2t+1) = log(Ct) + log(C2t+1) + 2023CtC2t+1. Assume that young individuals earn wt = 12, and that the interest rate is equal to 0, and that population is constant. a) Is the amount consumed by young the same as the amount consumed by old? b) Imagine that all cohorts behave optimally and save the optimal amount. However, it turns out that cohort born at time t chooses to save only 4. What is the level of consumption of such a cohort in period t + 1? c) Imagine that all cohorts behave optimally and save the optimal amount. However, it turns out that cohort born at time t chooses to save only 4. What is the level of consumption of young people at time t + 1? d) Imagine that the cohort born at time t+1 is taxed T. What is the amount saved in this ca Problem #1 Imagine that the preferences of consumers living in an OLG economy are represented with U (C, C2t+1) = log(Ct) + log(C2t+1) + 2023CtC2t+1. Assume that young individuals earn wt = 12, and that the interest rate is equal to 0, and that population is constant. a) Is the amount consumed by young the same as the amount consumed by old? b) Imagine that all cohorts behave optimally and save the optimal amount. However, it turns out that cohort born at time t chooses to save only 4. What is the level of consumption of such a cohort in period t + 1? c) Imagine that all cohorts behave optimally and save the optimal amount. However, it turns out that cohort born at time t chooses to save only 4. What is the level of consumption of young people at time t + 1? d) Imagine that the cohort born at time t+1 is taxed T. What is the amount saved in this ca
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a In this overlapping generations OLG economy the utility function Uc1t c2t1 represents the preferen... View the full answer
Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
Posted Date:
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