Assume an economy with 1000 consumers. Each consumer has income in the current period of 50 units and future income of 60 units, and pays a lump-sum tax of 10 in the current period and 20 in the future period. The market real interest rate is 8%. Of the 1000 consumers, 500 consume 60 units in the future, while 500 consume 20 units in the future.Determine each consumer’s current consumption and current saving.Current Consumption: Current Saving:Determine aggregate private saving, aggregate consumption in each period, government spending in the current and future periods, the current-period government deficit, and the quantity of debt issued by the government in the current period.Aggregate Private SavingAggregate ConsumptionGovernment spending:CurrentFutureCurrent period government deficitQuantity of debt

There are 1000 consumers Each consumer has current income=50, future income=60 Current tax=10 Future…

Answered: ssume an economy with 1000 consumers.…

Principles of Macroeconomics (MindTap Course List)

7th Edition

ISBN:9781285165912

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Savings,Investment And The Financial System

Section: Chapter Questions

Problem 2QCMC

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Assume an economy with 1000 consumers. Each consumer has income in the current period of 50 units and future income of 60 units, and pays a lump-sum tax of 10 in the current period and 20 in the future period. The market real interest rate is 8%. Of the 1000 consumers, 500 consume 60 units in the future, while 500 consume 20 units in the future.

1. Determine each consumer’s current consumption and current saving.
  1. Current Consumption:
  2. Current Saving:
2. Determine aggregate private saving, aggregate consumption in each period, government spending in the current and future periods, the current-period government deficit, and the quantity of debt issued by the government in the current period.
  1. Aggregate Private Saving
  2. Aggregate Consumption
  3. Government spending:
    1. Current
    2. Future
  4. Current period government deficit
  5. Quantity of debt

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