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December 10th, 2007, 12:40 PM   #1
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Challenging econ question

Mr.Smith has an income of $75 000 a year. At this income his federal and provincial tax rates total to 43%. His consumption at this disposable income is $36 750. Mr.Jones is about to retire. He has calculated that his yearly income will decrease by 40%. At this new income his new total tax rate will be 31%. Assume Mr.Smith's new MPC will equal 0.72.

a)calculate his new consumption level per year.
b)what were his initial APS?
c) What are his final APS?
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December 10th, 2007, 03:28 PM   #2
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Well, what do you have so far? Also, what definitions do you use for your terms (APS in particular).
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