What Is a Baseline Assumption That Economists Make About Consumer

question 4

Multiple Choice

What is a baseline assumption that economists make about consumer behavior?

• A)People are rational utility maximizers.
• B)People will always choose short-term benefits to longer-term payoffs.
• C)People will always choose what makes them happiest.
• D)People are unpredictable.

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Definitions:

Public Saving

The difference between a government's total revenue and its total expenditures, reflecting the surplus or deficit in the public sector's budget.

Private Saving

Private saving is the portion of households' and businesses' income that is not spent on consumption or paying taxes, and is instead saved for future use.

National Saving

The total saving of an economy, consisting of both private saving (by households and businesses) and public saving (government surplus).

Private Saving

The portion of households' income that is not used for consumption or paying taxes, but instead is saved.