The "Life Cycle" and "Permanent Income" Theories of Consumption Share

question 51

Multiple Choice

The "life cycle" and "permanent income" theories of consumption share which of the following features?

• A) Consumption remains stable on a permanent basis.
• B) Consumption spending depends on income, rather than wealth.
• C) Consumption spending should fluctuate widely from year to year.
• D) Consumers look ahead to the future in making current spending decisions.
• E) Consumption decisions are based on how well the stock market performs.

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Definitions:

Functioning

Refers to the way in which someone or something operates or performs, often used in the context of an individual's ability to carry out daily activities or tasks.

Social Drift

The theory that suggests individuals with severe mental illnesses tend to move downward in social class compared to their family of origin.

Schizophrenia

An intense mental health issue characterized by irregularities in reasoning, observing, mood, verbal expression, self-recognition, and actions.

Social Class

A division of a society based on social and economic status.