Explain why the intertemporal budget constraint pictured in Figure can be interpreted as requiring that individuals choose C 0 and C 1 so that the present value of this consumption is equal to their current income. Figure The Savings Decision 11eb5bc8_ebb2_ead7_bcf8_e1e22ce23745_SM2615_00 A person with a current income of Y can either spend this on current consumption, C 0 , or save it (at an interest rate of r ) to buy consumption next year, C 1. Here, the person?s utilitymaximizing choice is C * 0 , C * 1. Current savings are Y * 0.

Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder

النسخة 12الرقم المعياري الدولي: 978-1133189022

Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder

النسخة 12الرقم المعياري الدولي: 978-1133189022

تمرين 1

Explain why the intertemporal budget constraint pictured in Figure can be interpreted as requiring that individuals choose C 0 and C 1 so that the present value of this consumption is equal to their current income.
Figure The Savings Decision

A person with a current income of Y can either spend this on current consumption, C 0 , or save it (at an interest rate of r ) to buy consumption next year, C 1. Here, the person?s utilitymaximizing choice is C * 0 , C * 1. Current savings are Y * 0.

التوضيح

موثّق

Let us assume a consumer who chooses how...