Question: Suppose that in a certain defined benefit pension plan (a) Employees work for 45 years earning wages that increase at a real rate of 2%

Suppose that in a certain defined benefit pension plan

(a) Employees work for 45 years earning wages that increase at a real rate

of 2%

(b) They retire with a pension equal to 70% of their final salary. This pension

increases at the rate of inflation minus 1%.

(c) The pension is received for 18 years.

(d) The pension fund

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