In the Permanent-Income Hypothesis Incorporating Rational Expectations,the Actual Cyclical Pattern

question 85

Multiple Choice

In the permanent-income hypothesis incorporating rational expectations,the actual cyclical pattern of consumption in the United States is too ________ to justify the assumption that a current change in income ________.

• A)smooth,is a poor guide to future income changes
• B)volatile,is a poor guide to future income changes
• C)smooth,leads to a gradual change in permanent income
• D)volatile,leads to a gradual change in permanent income

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Definitions:

Sales Discounts

Reductions in the price of goods or services offered to customers, usually as an incentive to encourage prompt payment.

Sales Returns

Goods returned by the customer to the seller for a refund or credit, often due to defects or dissatisfaction.

Gross Price

Gross price refers to the total price of a product or service before any deductions, such as discounts or taxes, are applied.

Net Price

The final price after all discounts, rebates, and taxes are applied, indicating the actual cost to the buyer.