Consider Consumption in Two Periods $c _ { 1 }$ And $c _ { 2 }$

question 66

Multiple Choice

Consider consumption in two periods, $c _ { 1 }$ and $c _ { 2 }$ . Consumption smoothing implies:

• A) if taxes fall today, they will rise tomorrow
• B) people would consume \(c _ { 1 } = c _ { 2 }\)
• C) people would rather consume the average of \(c _ { 1 }\) and \(c _ { 2 }\)
• D) transitory income is zero
• E) people always know their future incomes and adjust consumption accordingly

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Definitions:

Coordination

The ability to use different parts of the body together smoothly and efficiently.

Secondary Circular Reactions

A stage in Piaget's theory of cognitive development, where infants repeat actions to trigger reactions in their environment, aiding in the understanding of cause and effect.

Object Permanence

The understanding that objects continue to exist even when they cannot be seen, heard, or otherwise sensed.

Sensorimotor Stage

The first stage in Piaget's theory of cognitive development, where infants learn through interacting with their environment, developing motor coordination and knowledge of the world.