Using the Neoclassical Model of Consumption,an Implication of the Permanent

question 15

Multiple Choice

Using the neoclassical model of consumption,an implication of the permanent income hypothesis is ___________ because of __________.

• A)consumption smoothing;diminishing marginal utility
• B)permanent income follows a random walk;aggregate demand shocks
• C)wealth is constant;real interest rates are,more or less,constant
• D)a low discount factor;the borrowing constraint
• E)no borrowing;income in the future is higher

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Definitions:

Average Product

The output per unit of input, calculated by dividing total product (output) by the number of units of the input.

Coffee House

A venue or establishment that primarily serves coffee and related beverages, often functioning as a social hub.

Coffee Machines

Appliances designed to brew coffee, varying widely in terms of functionality, design, and brewing techniques.

Labor Productivity

A measure of economic performance that compares the amount of goods and services produced with the number of labor hours used to produce them.