This question is about two-period consumption saving model. A) what is the price

Question

This question is about two-period consumption saving model. A) what is the price of future consumption in terms of current consumption? B) show to derive the consumer's lifetime budget constraint from the consumer's current and future budget constraints. This question is about two-period consumption saving model. A) what is the price of future consumption in terms of current consumption? B) show to derive the consumer's lifetime budget constraint from the consumer's current and future budget constraints. A) what is the price of future consumption in terms of current consumption? B) show to derive the consumer's lifetime budget constraint from the consumer's current and future budget constraints.

Explanation / Answer

the relative price of current consumption in terms of future consumption is (1+r) (and, likewise, the relative price of future consumption in terms of current consumption is 1/(1+r)).

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