If Fred Were to Consume $1,050 1 Year from Now

question 29

Multiple Choice

If Fred were to consume $1,050 1 year from now, he would consider this as good as spending $1,000 today.He would consider $1,628.89 of consumption 10 years into the future equivalent to $1,000 of consumption today.If the interest rate is 5%, Fred preferences

• A)are consistent with exponential discounting.
• B)are consistent with hyperbolic discounting.
• C)are consistent with geometric discounting.
• D)are inconsistent.
• E)violate the Weak Axiom of Revealed Preference.

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Definitions:

Piaget

A reference to Jean Piaget, a Swiss psychologist known for his pioneering work in child development and cognitive theory.

Cognitive Development

The process of growth and change in intellectual abilities, including thinking, reasoning, problem-solving, and understanding complex concepts.

Fine Motor Skills

The ability to use small muscle groups for detailed movements, such as writing or buttoning.

Centration

The tendency to focus on one part of a stimulus, situation, or idea and exclude all others; a characteristic of preoperational reasoning.