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Suppose That in the First Period,a Man Works,earns Income Y,and

Question 4

Multiple Choice

Suppose that in the first period,a man works,earns income Y,and saves S of the income.In the second (and last) period,the man consumes his savings plus whatever interest it earned (r is the interest rate) .Suppose that the government taxes interest income at a rate of t.What is the man's consumption in the second period?


A) S
B) S(1 + r - t) 2
C) S(1 + r - rt)
D) S(1 + r - t)

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