In a Simple Macro Model,an Increase in Households' Wealth Is

question 155

Multiple Choice

In a simple macro model,an increase in households' wealth is generally assumed to

• A)cause no change in desired consumption because consumption is a function of disposable income only.
• B)cause no change in desired consumption because the increase is always expected.
• C)cause a downward shift in the aggregate consumption function.
• D)cause an upward shift in the aggregate consumption function.
• E)affect only desired saving,not desired consumption.

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Definitions:

Pessimism

The tendency to see the worst aspect of things or believe that the worst will happen; a lack of hope or confidence in the future.

Pessimistic Explanatory

A tendency to interpret and explain negative events as being widespread, permanent, and uncontrollable.

State-Dependent Memory

The effect in which a person's memory recall improves when they are in the same mental state as the time the memory was created.

Learned Helplessness

A condition in which an individual becomes passive and unable to avoid negative situations due to previous experiences of powerlessness.