The Life-Cycle Hypothesis Predicts There to Be a Rather ________

question 5

Multiple Choice

The life-cycle hypothesis predicts there to be a rather ________ short-run multiplier and thus a rather ________ private economy.

• A)low,unstable
• B)low,stable
• C)high,unstable
• D)high,stable

---

Definitions:

Consolidated Balance Sheet

A financial statement that combines the assets, liabilities, and equity of a parent company and its subsidiaries, presenting them as a single economic entity.

Cost Method

An accounting approach where investments are recorded at their original purchase cost, only adjusting for impairment or sale.

Intercompany Sales

Transactions involving the exchange of goods or services between entities within the same parent company.

Pre-tax Profit

The income that a company has earned before any taxes have been deducted from this amount, also known as earnings before tax.