Modern Forward-Looking Theories of Consumption

question 57

Multiple Choice

Modern forward-looking theories of consumption

• A) are founded on the pioneering work done by Milton Friedman and Franco Modigliani on the permanent income theory and the life cycle theory, respectively.
• B) are based on consumption depending on current disposable income, current wealth, and expected paths of disposable income and wealth in the future.
• C) assert that individuals make long-term consumption decisions each year, using as much information about the present and the future as possible.
• D) do not preclude individuals' changing consumption plans as new information presents itself.
• E) all of the above.

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Definitions:

Just-In-Time (JIT) Shipments

A logistics strategy where materials and products are delivered exactly when needed for production or sale, minimizing inventory levels and storage costs.

Moving Assembly Line

An innovation in manufacturing where products are assembled as they move along a conveyor belt, significantly improving efficiency.

Transformation Process

The conversion of inputs into outputs, thus transforming raw materials, labor, and information into products or services.

Productivity Variables

Productivity variables are factors that influence the efficiency and effectiveness with which resources are converted into outputs, including technology, labor skills, and management practices.