Which of the Following Is NOT Consistent with the Permanent

question 226

Multiple Choice

Which of the following is NOT consistent with the permanent income hypothesis?

• A)The theory would predict that people's consumption would be greater than their income until their mid to late 20s.
• B)A person who won the lottery would spend at least 50 percent of their winnings in the first year.
• C)Consumption is greater than income when people reach old age.
• D)People gear their consumption to their expected earnings more than to their current income.

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Definitions:

Circadian Rhythm

An inborn, internal system that manages the rhythm of sleeping and waking, repeating about every 24 hours.

Manifest Content

In psychoanalytic theory, the apparent, literal content of a dream, as opposed to its hidden or latent content.

Paradoxical Content

Information or statements that contain seemingly contradictory elements, yet might hold a truth when examined more closely.

Hypnagogic

Pertaining to the transitional state from wakefulness to sleep, often accompanied by vivid sensory phenomena.