The left-hand side of the Euler equation, $$\left( c _ { \text {future } } / c _ { \text {today } } \right) = \beta ( 1 + R )$$ , represents the:
A) growth rate of income
B) total lifetime consumption, in dollars
C) lifetime utility function
D) discount factor
E) growth rate of consumption

Question

Quizplus · Accepted Answer

The left-hand side of the Euler equation represents the growth rate of consumption, as it compares future consumption to current consumption.

The Left-Hand Side of the Euler Equation (cfuture /ctoday )=β(1+R)\left( c _ { \text {future } } / c _ { \text {today } } \right) = \beta ( 1 + R )(cfuture ​/ctoday ​)=β(1+R)

The Left-Hand Side of the Euler Equation $\left( c _ { \text {future } } / c _ { \text {today } } \right) = \beta ( 1 + R )$