According to the Permanent Income Hypothesis, Why Did Consumption and Borrowings

question 47

Multiple Choice

According to the permanent income hypothesis, why did consumption and borrowings grow substantially in the late 1990s and 2000s?

• A) The late 1990s and 2000s was a period of sustained and historically low interest rates.
• B) The government enacted income tax cuts for a year beginning in 1990.
• C) The prices of assets like property were continually falling in the late 1990s and 2000s.
• D) In the late 1990s and 2000s, the level of consumer confidence was low as employment

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Definitions:

Stock Investments

The act of putting money into financial schemes, shares, property, or a commercial venture with the expectation of achieving a profit, particularly through the purchase of equity securities in companies.

Tangible

Capable of being touched or felt; having physical substance.

Intangible Personal Property

Non-physical assets owned by an individual or a business, such as intellectual property, stocks, or bonds.

Intellectual

Relating to the intellect or involving the exercise of the mind, often associated with knowledge and thinking processes.