A consumer's budget constraint in the current period is
A) c = y - t.
B) y = c + i + g.
C) y = c - s.
D) c + s = y + t.
E) c + s = y - t.

Question

Quizplus · Accepted Answer

The budget constraint represents the limit of a consumer's spending ability based on their income and taxes (or transfers). The equation c + s = y - t represents this, where c is consumption, s is savings, y is income, and t is taxes or transfers. The left-hand side of the equation shows the consumer's total resources available for consumption and savings, while the right-hand side shows their income after taxes or transfers. Therefore, the best choice is E.

A Consumer's Budget Constraint in the Current Period Is