Assume a consumer has current-period income y = 140, future- period income y' = 160, current and future taxes t = 20 and

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Assume A Consumer Has Current Period Income Y 140 Future Period Income Y 160 Current And Future Taxes T 20 And 1 (39.35 KiB) Viewed 37 times

Assume a consumer has current-period income y = 140, future- period income y' = 160, current and future taxes t = 20 and t' = 10, respectively, and faces a market real interest rate of r = 0.08, or 8% per period. The consumer has the following preferences over current and future consumption: U(c,c')=min(30,4c") A) Determine the consumer's lifetime wealth. B) Determine what the consumer's optimal current period and future-period consumption are and what optimal saving is and show this in a diagram with the consumer's budget constraint and indifference curves. Is the consumer a lender or a borrower?