According to the Permanent-Income and Life-Cycle Hypotheses, If We Wish

question 51

Multiple Choice

According to the permanent-income and life-cycle hypotheses, if we wish to smooth consumption over our lifetimes we can:

• A) get higher-paying jobs.
• B) borrow and lend to ourselves over our lifetimes.
• C) set consumption proportional to the real interest rate.
• D) never change our spending patterns.
• E) always save 15 percent of our incomes.

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Definitions:

Fixed Ratio

A reinforcement schedule in which a response is rewarded only after a certain number of responses have been made, resulting in a consistent and high rate of responding.

Variable Ratio

A reinforcement schedule in which a response is rewarded after a random number of responses, leading to a high resistance to extinction.

Fixed Interval

A schedule of reinforcement where the first response is rewarded only after a specified amount of time has elapsed, leading to a pattern of responses.

Variable Interval

Variable interval refers to a type of reinforcement schedule in operant conditioning where a response is rewarded after an unpredictable amount of time has passed, leading to a steady and resistant response rate.