【多恩布什版宏观经济学课后答案】第十三章.docVIP

Chapter 13 Solutions to the Problems in the Textbook: Conceptual Problems: 1.a. According to the life-cycle theory of consumption, people try to maintain a fairly stable consumption path over their lifetime. Individuals save during their working years so they can keep up the same consumption stream after they retire. This implies that wealth increases steadily until retirement while consumption remains stable. We should therefore expect the ratio of consumption to accumulated saving (wealth) to decrease over time up to retirement. 1.b. After retirement, wealth is used up to finance consumption during the remaining years. Therefore the ratio of consumption to accumulated saving (wealth) increases again after retirement, eventually approaching 1. 2.a. Suppose that you and your neighbor both work the same number of years until retirement and you both have the same annual income. If your neighbor is in bad health and does not expect to live as long as you do, she will expect to have fewer retirement years in which to use accumulated wealth to finance a steady consumption stream. Your neighbors goal for retirement saving will not be as high as yours, and compared to you, she will have a higher level of consumption over her working years. Since planned annual consumption (C) is determined by the number of working years (WL), the number of years to live (NL), and income from labor (YL), we get the equation: C = [(WL)/(NL)](YL). WL and YL are the same for you and your neighbor, but NL is smaller for your neighbor. Therefore you will have a lower level of consumption (C). (Note: Students may come up with a variety of different answers. For one, your neighbor, who is in bad health, currently has much larger medical bills than you do. Therefore she may not be able to save as much for retirement, even if she might expect to live as long as you. On the other hand, she may not have large medical bills now, but expects them later, as she gets older. This may induce her to save mo