If a Consumer Views a Unit of Consumption in Period

question 14

Multiple Choice

If a consumer views a unit of consumption in period 1 as a perfect substitute (one for one) for a unit of consumption in period 2 and if the real interest rate is positive, the consumer will

• A)consume only in period 1.
• B)consume only in period 2.
• C)consume equal amounts in each period.
• D)consume more in period 1 than in period 2 if income elasticity exceeds 1, otherwise consume more in period 2 than in period 1.
• E)equalize expenditures but not consumption in the two periods.

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Definitions:

Exit Incentives

Benefits offered to employees to encourage voluntary departure, typically used by organizations looking to reduce workforce size.

Medium-Term

A period typically extending from one year to five years, often used to describe goals, planning, or investment horizons.

Layoff

The temporary or permanent termination of employees due to economic downturns, restructuring, or other organizational changes.

Restructuring

The act of reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable or better organized for its present needs.