Hector's wealth is zero, he expects to work for another 45 years at a constant salary of $80,000 and live for another 60 years
Assuming taxes are zero, if Hector receives an unexpected $20,000 increase in salary his first year of work and he completely smooths consumption over his lifetime, his annual consumption is A) $67,500
B) $75,000.
C) $80,000.
D) $111,111.
B
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The major component of federal government consumption is spending on ________
A) Social Security, Medicare and Medicaid B) foreign aid C) capital goods, e.g. highways and schools D) national defense
When the price level decreases:
A. The demand for money falls and the interest rate falls B. Holders of financial assets with fixed money values decrease their spending C. Holders of financial assets with fixed money values have less purchasing power D. There is a decrease in consumer spending that is sensitive to changes in interest rates