If we represents a two-period consumer's lifetime wealth and $r$ denotes the real rate of interest, the vertical (future consumption) intercept of the consumer's budget line is equal to
A) $\frac { ( 1 + r ) } { w e }$.
B) $\frac { w e } { ( 1 + r ) }$.
C) $w e ( 1 + r )$.
D) we.
E) $- ( 1 + r ) \mathrm { c } + w e ( 1 + r )$.

Question

Quizplus · Accepted Answer

The vertical intercept of the consumer's budget line represents the maximum future consumption possible if the consumer saves all of their lifetime wealth, which is $we(1 + r)$.

If We Represents a Two-Period Consumer's Lifetime Wealth And rrr Denotes the Real Rate of Interest, the Vertical (Future Consumption)

If We Represents a Two-Period Consumer's Lifetime Wealth And $r$ Denotes the Real Rate of Interest, the Vertical (Future Consumption)