Asked by Taylor Fujimoto on Jul 07, 2024
Verified
The intertemporal budget constraint for a consumer can be expressed by setting the present value of her lifetime consumption equal to the future value of her endowment.
Intertemporal Budget Constraint
A concept that describes the trade-offs between current and future consumption, considering the effects of present decisions on future financial standing.
Present Value
The current worth of a future sum of money or stream of cash flows, given a specific rate of return.
Lifetime Consumption
Refers to the total amount of goods and services consumed by an individual over the entirety of their life.
- Gain an understanding of the intertemporal budget constraint and how it influences consumption decisions across different periods.
Verified Answer
YW
yonatan wogayehuJul 10, 2024
Final Answer :
False
Explanation :
The intertemporal budget constraint for a consumer is expressed by setting the present value of her lifetime consumption equal to the present value of her lifetime endowment, not the future value.
Learning Objectives
- Gain an understanding of the intertemporal budget constraint and how it influences consumption decisions across different periods.