With a Rise in the Stock Market,the Simple LCH Model

question 24

Multiple Choice

With a rise in the stock market,the simple LCH model with no bequests predicts ________ in current consumption.Then when adding to the model bequests due to catastrophic illnesses and expenses that fail to occur,current consumption is ________.

• A)a fall,still predicted to fall
• B)a fall,predicted to rise
• C)no change,predicted to rise
• D)a rise,still predicted to rise
• E)a rise,predicted to remain unchanged

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Definitions:

Cross-Price Elasticity

A measure of how the quantity demanded of one good responds to a price change in another good.

Electricity

A form of energy resulting from the existence of charged particles such as electrons or protons, used as a power source.

Natural Gas

A fossil fuel formed from plants and animals buried under the Earth's surface and exposed to extreme heat and pressure over millions of years.

Cross-Price Elasticity

A measure of how the quantity demanded of one good changes in response to a change in the price of another good.