Both the PIH and the LCH Predict That

question 56

Multiple Choice

Both the PIH and the LCH predict that

• A)total consumption may rise as a fraction of income when actual income rises due to the upsurge in purchases of consumer durables.
• B)the saving ratio will fall with higher income when consumer durables are counted as consumption expenditure.
• C)the saving ratio will fall with higher income when consumer durables are counted as saving.
• D)A and B are both correct.

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Definitions:

Validity

Refers to the extent to which a test or instrument measures what it is supposed to measure.

Phenomena

Observable events or circumstances that can be studied in scientific or philosophical contexts.

Laboratory Setting

A controlled environment where scientific research, experiments, and measurement are conducted.

Naturalistic Setting

An environment in which behavior is observed under normal or usual conditions without manipulation by the observer.