Given a 20-Year Planning Horizon and a Real Interest Rate

question 13

Multiple Choice

Given a 20-year planning horizon and a real interest rate of 0 percent, an individual receiving a $1,000 increase in income would display a marginal propensity to consume

• A) of 1 if the increase is thought to be permanent and 0.5 if it is viewed as a one-time windfall.
• B) of 1 if the increase is thought to be permanent and 0.05 if it is viewed as a one-time windfall.
• C) that is higher if the increase is permanent than temporary, but it is impossible to specify exact numbers with the information provided.
• D) that is lower if the increase is permanent than temporary, but it is impossible to specify exact numbers with the information provided.
• E) none of the above.

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Definitions:

Psychophysiological Disorders

Physical illnesses that are thought to be caused or exacerbated by mental factors such as stress and anxiety.

Social Conditions

Refers to the societal factors and circumstances that influence individuals' lifestyles, behaviors, and attitudes.

Poverty

A state of economic deprivation, lacking sufficient income to meet basic needs such as food, shelter, and clothing.

Hypersomnolence Disorder

A sleep-wake disorder characterized by an extreme need for extra sleep and feelings of excessive sleepiness.