In a Simple Macro Model,a Decrease in Households' Wealth Is

question 17

Multiple Choice

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

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

---

Definitions:

Classical Conditioning

An educational process where two signals are consistently linked together; initially, the response is triggered by the second signal but over time, it starts being triggered by the first signal alone.

Associative Learning

The process by which an individual learns to connect two stimuli or a behavior and its consequence, forming new knowledge.

Sensitization

An increased reaction to a stimulus following repeated exposure to it, often used in the context of drug addiction or allergy.

Behaviorism

A theory of learning based on the idea that all behaviors are acquired through conditioning.