The Theory of Intertemporal Choice,and the Life-Cycle and Permanent Income

question 67

Multiple Choice

The theory of intertemporal choice,and the life-cycle and permanent income hypotheses have in common the assumption that ________.

• A)consumption decisions are affected by current expectations about lifetime resources
• B)consumption decisions are based on all available information
• C)current income,rather than expected income,has the greater influence on consumption decisions
• D)decisions to borrow and save are influenced much more by immediate circumstances than by long-term consequences

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Definitions:

Cash Discount

A deduction from the stated price of goods or services offered to buyers as an incentive for early payment.

Credit Terms

Conditions under which credit is extended by a lender to a borrower, including interest rates, repayment schedule, and other stipulations guiding the borrowing.

Merchandise Inventory

Goods or stock that a retailer, wholesaler, or distributor holds for the purpose of resale to customers.

Sales Returns

Transactions where customers return previously purchased merchandise, leading to a refund or credit.