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Microfounded consumption theories are often discussed under the assumption that people live forever. In this case the IBC is written as:

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\$\\sum\\limits^\\infty_{t=0}\\frac{1}{\\left(1 + r\\right)^t}c_t = a_0 + \\sum\\limits^\\infty_{t=0} \\frac{1}{\\left(1 + r\\right)^t}y_t = W_0.\$

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Employ the properties of the geometric series to calculate the level of consumption from the IBC in this equation, under the assumption that both consumption and income are constant over time and equal to \$$c\$$ and \$$y\$$ respectively.

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C = [[0]]

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Activity 9.1

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