If you live T periods, $\beta = 1$ , and $R = 0$
, with logarithmic utility, the marginal propensity of income is approximately equal to:
A) 1/T
B) T
C) 1/2
D) $\bar {W}$
E) $\beta ( 1 + R )$

Question

Quizplus · Accepted Answer

With $\beta = 1$ and $R = 0$, the marginal propensity to consume out of income in each period is approximately $1/T$ because the consumer spreads consumption evenly across all periods.

If You Live T Periods β=1\beta = 1β=1 , And R=0R = 0R=0

If You Live T Periods $\beta = 1$ , And $R = 0$