Short-Run Marginal Propensities to Consume Are Smaller Than Long-Run Propensities

question 51

Multiple Choice

Short-run marginal propensities to consume are smaller than long-run propensities in part because

• A) people need time to decide whether or not an increase in income is permanent or temporary and the propensity applied to a permanent change is smaller than the propensity applied to a temporary change.
• B) people need time to decide whether or not an increase in income is permanent or temporary and the propensity applied to a permanent change is larger than the propensity applied to a temporary one.
• C) people make rash decisions in the short run and thereby overspend.
• D) it takes a long time for the consumer durables that dominate long- run consumption to be delivered and paid for.
• E) none of the above.

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Definitions:

Developmental Science

The interdisciplinary field of study focused on understanding the complexity of human growth and development across the lifespan.

Variables

Elements that can change and impact the outcome of experiments or studies, including independent, dependent, and controlled variables.

Evidence

Information or data used to support a conclusion, hypothesis, or belief, often gathered through observation or research.

Developmental Psychology

A branch of psychology that studies how people grow and change over the course of a lifetime.