In the Absence of a Financial System,the Two-Period Model Without

question 22

Multiple Choice

In the absence of a financial system,the two-period model without taxes predicts that

• A) consumption is more volatile that output.
• B) consumption is as volatile as output.
• C) consumption is less volatile than output.
• D) We do not know.

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Definitions:

Persuasive Messages

Communications designed to convince or influence an audience to take a specific action or adopt a particular belief by appealing to reason or emotion.

Analogy

A comparison between two things, typically on the basis of their structure and for the purpose of explanation or clarification.

Familiar

Well known from long or close association, easily recognized or understood based on prior experience.

Unfamiliar

Not known or recognized, often referring to concepts, words, or environments that are not understood due to a lack of experience.