It is mentioned in the core that the inter-temporal rate of substitution was lower in the good state of the economy compared with the bad state. Is this correct statement.
Because the ratio of the marginal utility of consumption in the future (the numerator) to the marginal utility of consumption today (the denominator)—is known as the inter-temporal rate of substitution. Further, In “good” economic times, individuals may have relatively high levels of current income so that current consumption is high. In this case, the utility derived from an additional unit of consumption today will be relatively low.
It means, High/low , how it can be low.
Answered multiple times earlier. Please check in this category.
I am unable to find the answer. Kindly tell whether the statement is correct. If yes, then is it not contradicting the basic premise of IRS.