Hector's Wealth Is Zero,he Expects to Work for Another 45

question 71

Multiple Choice

Hector's wealth is zero,he expects to work for another 45 years at a constant salary of ?$80 000 and live for another 60 years.If yearly taxes are $20 000 and Hector completely smooths consumption over his lifetime,Hector's annual consumption is ________ less than it would be if yearly taxes were zero.

• A) $5000
• B) $7500
• C) $15 000
• D) $20 000

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