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The Marginal Rate of Substitution of Future Leisure for Future

question 27

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The marginal rate of substitution of future leisure for future consumption must be equal to


Definitions:

Induced Consumption

Consumer spending that is influenced by changes in income, differentiating from autonomous consumption which does not vary with income.

Disposable Income

The liquidity households have for spending and saving, after income taxes have been deducted.

Consumption

The act of using goods and services by households that leads to a decrease in their availability.

APC

In economics, stands for Average Propensity to Consume, which is the ratio of total consumption to total disposable income.

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