According to the Statistical Model of Ando and Modigliani, It

question 3

Multiple Choice

According to the statistical model of Ando and Modigliani, it may be possible to explain the reduction in consumption that marked 1973 in terms of

• A) a sudden reduction in the long-run marginal propensity to consume.
• B) a sudden increase in the short-run marginal propensity to consume.
• C) a steep decline in the value of assets in which people hold their wealth.
• D) an inability of most consumers to see the temporary nature of the oil shock.
• E) an increase in saving caused by individuals wanting to prepare for an anticipated recovery from the oil shock in the medium term.

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Definitions:

Net Fixed Assets

The value of a company’s property, plant, and equipment minus any depreciation that has been accounted for.

Larger Population

A term referring to a broader group of individuals or observations from which a sample is drawn for research purposes.

Sample

A subset selected from a larger population for the purpose of statistical analysis.

Null Hypothesis

A statement postulating that there is no difference or effect, used as a starting assumption in hypothesis testing.