If Households Expect an Increase in Their Future Incomes, They

question 150

Multiple Choice

If households expect an increase in their future incomes, they will save

• A) less and consume more today.
• B) more and consume less today.
• C) and consume more today.
• D) and consume less today.

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Definitions:

AVC

Average Variable Cost, which is the total variable costs of production divided by the quantity of output produced.

Economic Profits

Profits calculated by subtracting both explicit and implicit costs from revenue; also known as supernormal profits.

Industry Growth

The increase in the production or sales in a particular industry over a specific period, often driven by factors such as technological advances and increases in demand.

Normal Profits

The required minimum level of profit needed for a company to remain competitive in the market; it is part of the firm's opportunity costs.