The condition,MRSC,C' = 1 + r,describes the representative consumer's
A) investment decision.
B) consumption - savings decision.
C) current period work - leisure decision.
D) future period work - leisure decision.

Question

Quizplus · Accepted Answer

MRSC stands for Marginal Rate of Substitution of Consumption and it measures the rate at which a consumer is willing to trade some amount of consumption for an additional unit of savings. Therefore, the condition MRSC, C' = 1 + r represents the consumer's consumption-savings decision. In other words, the consumer is deciding how much to consume now and how much to save for future consumption based on the interest rate (r).

The Condition,MRSC,C' = 1 + R,describes the Representative Consumer's