If Two Households Have the Same Disposable Income in the Current

question 106

Multiple Choice

If two households have the same disposable income in the current year, the household with the

• A) higher expected future income will consume a larger portion of its current income today.
• B) lower expected future income will spend a larger portion of its current income on consumption today because it will increase its saving in the future.
• C) lower expected future income will consume more today while it has the money.
• D) none of the above

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Definitions:

Coconuts

Tropical fruits with a hard outer shell, edible white flesh, and clear liquid inside, often used in cooking and as a beverage.

Fish

Aquatic animals that are typically covered with scales and have gills, commonly harvested as food or kept as pets.

Straight Line

The shortest distance between any two points, or a line with a constant slope, in geometric terms.

Opportunity Costs

Opportunity costs represent the benefits an individual, investor, or business misses out on when choosing one alternative over another.