A consumer's budget constraint in the future period is
A) $c ^ { \prime } + ( 1 + r ) s = y ^ { \prime } - t ^ { \prime }$.
B) $c ^ { \prime } = y ^ { \prime } - t ^ { \prime } + ( 1 + r ) s$.
C) $y ^ { \prime } - t ^ { \prime } = ( 1 + r ) s$.
D) $c ^ { \prime } = y ^ { \prime } - t ^ { \prime } - ( 1 + r ) s$.
E) $c + s = y - t$.

Question

Quizplus · Accepted Answer

The budget constraint equation for the future period is given as $c ^ { \prime } + ( 1 + r ) s = y ^ { \prime } - t ^ { \prime }$. This equation states that the consumer can either consume or save out of their income and previous savings, subject to the interest rate and taxes in the future period. We can rearrange the equation to get $c ^ { \prime } = y ^ { \prime } - t ^ { \prime } + ( 1 + r ) s$, which shows that the consumer's future consumption depends on future income, taxes, and their current savings. Therefore, option B is the correct choice.

A Consumer's Budget Constraint in the Future Period Is A) c′+(1+r)s=y′−t′c ^ { \prime } + ( 1 + r ) s = y ^ { \prime } - t ^ { \prime }c′+(1+r)s=y′−t′

A Consumer's Budget Constraint in the Future Period Is
A) $c ^ { \prime } + ( 1 + r ) s = y ^ { \prime } - t ^ { \prime }$