In a two-period life cycle model the equilibrium condition, Ask an Expert

Economics

In a two-period life cycle model, the equilibrium condition is that the marginal rate of substitution of future consumption for current consumption equals one plus the interest rate. Explain what would happen if the MRS exceeds one plus the interest rate, and what forces would be at work to drive things back to equilibrium.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91992429

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