If Consumers Obey the Permanent-Income Hypothesis and Have Rational Expectations

question 103

Multiple Choice

If consumers obey the permanent-income hypothesis and have rational expectations, then policy changes affect consumption when the policy changes:

• A) are proposed.
• B) go into effect.
• C) change expectations.
• D) do not surprise consumers.

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Definitions:

Social Responsibility

The obligation of individuals, groups, or organizations to act for the benefit of society at large, considering the impact of their activities.

High Status Persons

Individuals who hold a position of power, prestige, or high social standing within a group or society.

Communication

The process of exchanging information, ideas, thoughts, and feelings between people through speech, writing, visuals, or behavior.

Intrasender Role Conflict

A situation where an individual receives conflicting messages or expectations from the same source, leading to stress or confusion.