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How would each of the following affect Cheryl Shirker's current consumption and saving? Cheryl is a forward-looking consumer with no borrowing constraints.
(a)Cheryl's firm announces a reorganization plan,increasing Cheryl's future income dramatically.
(b)Cheryl's father,who had planned to leave her a large bequest,must spend all his wealth on medical bills after a prolonged illness.
(c)The real interest rate rises from its original level.Cheryl originally planned to have no assets for the future; that is,she planned to spend all her original assets and all her income when she was young,and planned to consume an amount equal to her future income when she was old.
Interval Measures
A scale of measurement in which the numerical differences between values are meaningful, and there is no true zero point.
Equal Distance
A measure indicating that two or more points are at the same spatial or conceptual distance from each other.
Number
A mathematical object used to count, measure, and label.
Computed
Calculated or determined by a computer or computer process.
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