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6 May 2018
64) Now suppose that the government institutes the mandatory public pension plan where the household must pay a premium of 350 in the present, but will receive a benefit of 490 to consume in the future (as in 63) above. But suppose the interest rate is r = 20%. Relative to the (Cp Cp) bundle (650, 490), the household will: A) do nothing, it will consume the bundle B) engage in private saving to increase both Cpand C C) engage in private saving to decrease Cp and increase C D) engage in private borrowing to increase Cp and decrease C E) engage in private borrowing to increase both Cp and CF
64) Now suppose that the government institutes the mandatory public pension plan where the household must pay a premium of 350 in the present, but will receive a benefit of 490 to consume in the future (as in 63) above. But suppose the interest rate is r = 20%. Relative to the (Cp Cp) bundle (650, 490), the household will: A) do nothing, it will consume the bundle B) engage in private saving to increase both Cpand C C) engage in private saving to decrease Cp and increase C D) engage in private borrowing to increase Cp and decrease C E) engage in private borrowing to increase both Cp and CF
Beverley SmithLv2
9 May 2018
