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:

Sigmund Freud

An Austrian neurologist and the founder of psychoanalysis, a clinical method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Independent Variable

A condition in a scientific study that is manipulated so that its effects may be observed.

Experimenters

Individuals who conduct experiments, often in a scientific context, to test hypotheses and observe outcomes.

Unconscious Processes

Mental activities that occur without conscious awareness, influencing behaviors, thoughts, and feelings.