What's the equation for the present-value budget constraint?

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yvanyvanthb502

Economics

Description

What's the equation for the present-value budget constraint?

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Explanation & Answer

P_x x+P_y y=m

Where:

  • m= money income allocated to consumption (after saving and borrowing)
  • P_x= the price of a specific good
  • P_y= the price of all other goods
  • x= amount purchased of a specific good
  • y= amount purchased of all other goods


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