The Theory of Consumption of Durable Goods

question 37

Multiple Choice

The theory of consumption of durable goods

• A)is basically a theory of investment applied to households
• B)states that durable goods purchases are very insensitive to interest rate changes
• C)can be explained very well by the life-cycle theory, since people spread their durable goods purchases equally over their lifetimes
• D)suggests that expenditures on durable goods do not increase utility as much as expenditures on other consumption goods
• E)none of the above

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