If Two Households Have the Same Disposable Income in the Current

question 23

Multiple Choice

If two households have the same disposable income in the current year, the household with the

• A) higher expected future income will consume a larger portion of its current income today.
• B) lower expected future income will consume more today while it has the money.
• C) lower expected future income will spend a larger portion of its current income on consumption today because it will increase its saving in the future.
• D) none of the above

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Definitions:

Trade Restrictions

Measures imposed by governments to regulate or limit international trade for the purpose of protecting domestic industries.

Jobs and Income Argument

A perspective that emphasizes the creation of jobs and income generation as primary economic objectives.

Economic Efficiency

The optimal allocation of resources in a manner that maximizes the production and distribution of goods and services.

Embargo

A government order that restricts commerce with a specified country or the exchange of specific goods.