In a two-period life cycle model the equilibrium condition


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: In a two-period life cycle model the equilibrium condition
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