The parameter in the consumer's lifetime utility function represents the ________ and is ________ if utility is worth more today than in the future.
A) weight he or she puts on the future relative to today; less than one
B) value of future consumption; equal to one or equal to zero
C) expected present value of lifetime wealth; unknown today
D) rate of return to savings; equal to long-term bond yields
E) annual income growth; equal to the average GDP growth rate

Question

The parameter  in the consumer's lifetime utility function represents the ________ and is ________ if utility is worth more today than in the future.
A) weight he or she puts on the future relative to today; less than one 
B) value of future consumption; equal to one or equal to zero 
C) expected present value of lifetime wealth; unknown today 
D) rate of return to savings; equal to long-term bond yields 
E) annual income growth; equal to the average GDP growth rate

Quizplus · Accepted Answer

The parameter 11eab38d_06eb_838f_a5fb_775bce57e9df_TB6622_00 represents the weight the consumer puts on the future relative to today. If utility is worth more today than in the future, the weight would be less than one, reflecting a lower value placed on future consumption. Therefore, option A is the best choice.

The Parameter in the Consumer's Lifetime Utility Function Represents