What is her apc, Basic Statistics

Assignment Help:

The life-cycle hypothesis is based on the assumption that people try to smooth their consumption over their expected adult lifetimes.  Suppose Tammy expects to live for another T years and expects to work for R years and earn an annual real income of Y dollars per year.

Tammy will then retire for (T - R) years, and she wants to smooth her annual consumption C and also plans to spend her entire lifetime earnings (R x Y) over the remaining T years.  This could be expressed as:

C x T = R x Y.

Note that in class I would have expressed this as:

C x NL = WL x YL

Where NL represents the number of years of life remaining, WL the number of years of working life remaining, and YL the annual real income per year over the WL years of work.

a.  Suppose Tammy begins working at age 20, intends to retire at age 65, and expects to live until age 80.  If Y = $40,000, what is Tammy's annual C?  What is her APC?  Her APS?

b.  Now suppose Tammy begins her adult life with an initial wealth level equal to W.  Consequently, the total amount she will now have available to spend during her lifetime will be

(R x Y + W).  If Tammy still wishes to smooth her consumption, then:

C x T = (R x Y) + W

Suppose that W = $120,000 and Y = $40,000.  What is Tammy's annual C under these assumptions? 

c.  Assume now that Y rises to $80,000 and W remains equal to $120,000.  What is the MPC out of income (Y)?  What is the APC out of wealth (APCW)?


Related Discussions:- What is her apc

Correlation matrix, A. Complete the correlation matrix table. B. Which vari...

A. Complete the correlation matrix table. B. Which variable (s) has the highest correlation coeffieient which is not a perfect correlation? C. Which variable (s) has the lowest cor

Bond Relationship, Bond Relationship A debt gadget issued through a offici...

Bond Relationship A debt gadget issued through a official or just the formal legal procedure and secured either by the pledge of detailed properties or revenues or by the general

Cost accounting, what is the relationship of cost accounting to financial a...

what is the relationship of cost accounting to financial and management accounting?

Variance analysis, Variance analysis In spending budget (or control sales ...

Variance analysis In spending budget (or control sales in general), a change is the change between an allocated, thought out or conventional quantity and the actual quantity incur

Assignment, Discuss about the scalling techniques

Discuss about the scalling techniques

Calculate the mean value and variance, 1. Generate 1000 samples for each of...

1. Generate 1000 samples for each of the following discrete random variables: (a). Binomial distribution with n=40, p=0.7, and distr. with n=50, p=0.5 (b). Geometric distribu

Biostatistics, when testing hypothesis is the level of significanc the type...

when testing hypothesis is the level of significanc the type error I?

Case study, A survey was conducted among the residents of Pune City, its su...

A survey was conducted among the residents of Pune City, its suburbs and the PuneCantonment area. The following three pie diagrams show their respective preferences for living in C

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd