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According to Hall, Consumption Spending Follows a Random Walk And

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Essay

According to Hall, consumption spending follows a random walk and, according to the efficient-markets model, stock prices follow a random walk.
a. What determines changes in consumption and stock prices in this case?
b. What is the implication of following a random walk for predicting changes in consumption and stock prices?


Definitions:

Stratification

The hierarchical arrangement of individuals in a society, often based on factors like wealth, power, and prestige.

Subordination

The condition of being lower in rank or position, or the process of placing someone or something in such a lower position.

Polyandry

A form of marriage in which a woman has more than one husband at the same time.

Multiple Wives

A marital practice wherein an individual has more than one wife simultaneously, known as polygyny.

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