If Consumers Correctly Anticipate Their Future Incomes

question 56

Multiple Choice

If consumers correctly anticipate their future incomes:

• A) the saving rate will be high when consumers anticipate a boom.
• B) the saving rate will be low when consumers anticipate a boom.
• C) the saving rate will be low when consumers anticipate a recession.
• D) they will be disappointed because future income can never be correctly forecasted.

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Definitions:

Direct Transfer

A method of transferring assets or funds from one account to another without any intermediary processing steps.

Secondary Market

Sales of existing securities between investors. Compare with Primary market.

Stock

An ownership share in a corporation, representing a claim on part of the company's assets and earnings.

Transaction

An instance of buying or selling something; a business deal or financial arrangement between two parties.