If moving an extra unit of today's consumption to future consumption improves your lifetime utility, you are not:
A) equalizing consumption over time.
B) satisfying the Euler equation.
C) satisfying your intertemporal budget constraint.
D) putting enough into increasing your family wealth.
E) paying enough taxes to finance Social Security.

Question

Quizplus · Accepted Answer

The statement is essentially saying that the marginal rate of time preference is less than the real interest rate, which is the condition satisfied by the Euler equation. Therefore, if moving an extra unit of consumption to the future improves your lifetime utility, you are satisfying the Euler equation. The other choices are irrelevant to the given statement.

If Moving an Extra Unit of Today's Consumption to Future