John Is Planning Ahead for Retirement in a Two-Period World

question 506

Multiple Choice

John is planning ahead for retirement in a two-period world. When John is young he will earn $1 million, and when John is old and retired he will be given $50,000 from Social Security. If the interest rate between the two time periods is 7 percent, what is the slope of John's budget constraint when considering the consumption possibilities between the two periods if consumption when young is graphed on the horizontal axis and consumption when old is graphed on the vertical axis?

• A)-0.89
• B)-1.05
• C)-1.07
• D)-1.12

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Definitions:

Vestibular System

The sensory system that contributes to balance and spatial orientation for the purpose of coordinating movement with balance.

Action Potentials

Electrical impulses that are part of the process that cells use to communicate with each other, crucial for the functioning of nerves and muscles.

Unilateral Damage

Harm or injury to one side of the body or brain, affecting one half of the body or one of a pair of bodily organs.

Spinal Cord

A long, thin, tubular structure made up of nervous tissue, which extends from the medulla oblongata in the brainstem down to the lower back, and is a major part of the central nervous system.