Actual Consumption Behavior Exhibits Both "Excess Smoothness" and "Excess Sensitivity

question 41

Multiple Choice

Actual consumption behavior exhibits both "excess smoothness" and "excess sensitivity," which means that

• A)consumption responds too strongly to surprise changes in income
• B)consumption responds too little to predictable changes in income
• C)consumption always follows a random walk
• D)consumption always adjusts with long lags
• E)none of the above

---

Definitions:

Moral Development

The process through which children become capable of making moral judgments.

Piaget's Model

A theory of cognitive development proposed by Jean Piaget that outlines how children's intellectual abilities evolve through four stages from infancy to adolescence.

Kohlberg's Model

A theory of moral development proposed by Lawrence Kohlberg, which outlines the progression of moral reasoning through a series of stages.

Language Acquisition

The process by which humans learn to perceive, recognize, and produce language, often focusing on the stages of development in children.