Suppose that Chenyu expects his income to be $50,000 per year until she retires. In addition, he has accumulated $250,000 in wealth. Calculate his annual level of consumption.
a) Derive Chenyu's consumption function in terms of her annual income Y and initial wealth W according to the life-cycle model.
b) Suppose that Chenyu expects his income to be $50,000 per year until she retires. In addition, he has accumulated $250,000 in wealth. Calculate his annual level of consumption.