According to the Life-Cycle Theory of Consumption, What Should Have

question 45

Multiple Choice

According to the life-cycle theory of consumption, what should have occurred after the stock market crash of 1987?

• A)a decrease in current consumption
• B)no change in current consumption since only nominal wealth was lost
• C)no change in aggregate consumption since most people do not invest in the stock market
• D)an increase in consumption since people were afraid to save
• E)both B and C

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Definitions:

Disinhibited

Exhibiting reduced restraint or a lack of inhibition in behavior and speech, often resulting from emotional distress, brain injury, or other conditions.

Depressant

A class of drugs that reduce neural activity and slow down the functions of the body.

Hallucinogenic

Substances that cause alterations in perception, mood, consciousness, and thought, often inducing visions or experiences that seem real but are not.

Opiate Receptors

Specialized proteins located in the brain, spinal cord, and gastrointestinal tract that interact with opiate drugs and endogenous opioids to reduce pain and induce feelings of pleasure.