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

Satisfying the Euler equation means that the marginal utility of consumption today is equal to the marginal utility of consumption tomorrow, multiplied by the rate of time preference and the marginal rate of substitution between consumption today and consumption tomorrow. If moving an extra unit of today's consumption to future consumption improves your lifetime utility, then the marginal utility of consumption tomorrow is greater than the marginal utility of consumption today, which means that you are not satisfying the Euler equation.

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