If People Leave Bequests Primarily Because They Are Uncertain About

question 47

Multiple Choice

If people leave bequests primarily because they are uncertain about the timing of their deaths,

• A)the marginal propensity to consume out of a temporary change in income would tend to be higher than in the simple version of the LCH.
• B)unrealized capital gains from higher housing prices will probably lead to a higher consumption-to-income ratio than in the simple version of the LCH.
• C)increases in wealth from the stock market would be consumed over a longer time horizon than in the simple version of the LCH.
• D)A and C are both correct.

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Definitions:

Self-assessment

The process of evaluating one's own thoughts, feelings, behaviors, and abilities, often in relation to personal goals or standards.

Psychology

The science that studies behavior and the physiological and mental processes that underlie it and the profession that applies the accumulated knowledge of this science to practical problems.

Outgoing

A personality trait characterized by a person being sociable, extroverted, and willing to engage with others.

Reserved People

Individuals who are naturally reticent, shy, or inclined to keep their thoughts and feelings to themselves.