The problem the household must solve is:
A) choosing period consumption to satisfy the concurrent budget constraint.
B) choosing consumption to ensure some income is left over for future generations.
C) satisfying the intertemporal budget constraint by finding a good source of income.
D) making sure the household is saving at least 10 percent of its income.
E) choosing lifetime consumption that satisfies the intertemporal budget constraint.

Question

Quizplus · Accepted Answer

The problem the household must solve is to choose lifetime consumption that satisfies the intertemporal budget constraint. This means that they need to optimize their consumption over their entire lifetime while taking into account their income and expenses at different points in time. Making choices that result in intertemporal consistency will help ensure the household's financial stability and well-being in the long run.

The Problem the Household Must Solve Is