The Random-Walk Theory of Consumption Predicts That

question 5

Multiple Choice

The random-walk theory of consumption predicts that

• A)the slope of a line relating C(t+1)to C(t)is equal to 1
• B)the slope of a line relating C(t+1) to C(t) is equal to 0
• C)the slope of a line relating C(t+1) to C(t) is close to 0
• D)the slope of a line relating C(t)to Y(t)is close to 1
• E)none of the above

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