Recall the formula we derived in class for thediscount rate:

MPK=MU0MU1MU1+

whereMP_Kis the marginal product of capital and is equal to the discount rate, MU₀is the marginal utility of consumption now, MU₁is the marginal utility of consumption later, and is the rate of depreciation of capital.

If we expect to bewealthier later -- that is, if we expect that we can consume more later than we do now -- would you say that

Group of answer choices

The discount rate will behigher than the rate of capital depreciation because the marginal utility of consumption in the future will be lower than it is now if we are wealthier in the future.

The discount rate will be lower than the rate of capital depreciation because the marginal utility of consumption in the future will be lower than it is now if we are wealthier in the future.

The discount rate will behigher than the rate of capital depreciation because the marginal utility of consumption in the future will behigher than it is now if we are wealthier in the future.

The discount rate will be lower than the rate of capital depreciation because the marginal utility of consumption in the future will be higher than it is now if we are wealthier in the future.