The Fisher two-period model shows that current consumption depends on:
A) only current income.
B) only future income.
C) current income, future income, and the interest rate.
D) current income, future income, the interest rate, and the rate of inflation.

Question

Quizplus · Accepted Answer

The Fisher two-period model includes current income, future income, and the interest rate as factors that influence current consumption. The rate of inflation is not explicitly included in the model.

The Fisher Two-Period Model Shows That Current Consumption Depends On