The parameter
In the consumer's lifetime utility function represents the ___________ and is __________.
A)weight he puts on the future relative to today;less than one
B)value of future consumption;equal to one or equal to zero
C)expected present value of lifetime wealth;unknown today
D)rate of return to savings;equal to long-term bond yields
E)annual income growth;equal to the average GDP growth rate

Question

The parameter 
In the consumer's lifetime utility function represents the ___________ and is __________.
A)weight he puts on the future relative to today;less than one 
B)value of future consumption;equal to one or equal to zero 
C)expected present value of lifetime wealth;unknown today 
D)rate of return to savings;equal to long-term bond yields 
E)annual income growth;equal to the average GDP growth rate

Quizplus · Accepted Answer

The parameter 11ea895d_4da1_1f05_8397_9f909918f1ce_TB4305_11 in the consumer's lifetime utility function represents the weight he puts on the future relative to today, and typically this weight is less than one. Option A best describes this. Option B is incorrect because the parameter does not necessarily represent the value of future consumption, and it can vary across individuals. Option C is incorrect because the parameter does not represent the expected present value of lifetime wealth, as this would depend on other factors as well. Option D is incorrect because the parameter is not equal to long-term bond yields, which represent the return on a particular investment, and not the individual's preferences. Option E is also incorrect because the parameter does not represent the average GDP growth rate or any specific income growth rate, as this would depend on other individual-specific factors.

The Parameter in the Consumer's Lifetime Utility Function Represents the ___________ and the ___________

The Parameter in the Consumer's Lifetime Utility Function Represents the _ and the _