Fisher's Separation Theorem demonstrates how individuals can substitute present consumption for future consumption.

Question

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Fisher's Separation Theorem states that an individual's consumption decisions should be independent of their investment decisions. This means that individuals can choose to consume a larger portion of their wealth in the present, or they can choose to save and invest more for future consumption. Therefore, it does demonstrate how individuals can substitute present consumption for future consumption.

Fisher's Separation Theorem Demonstrates How Individuals Can Substitute Present Consumption