The Life-Cycle Hypothesis and the Permanent-Income Hypothesis Both Assume That

question 91

Multiple Choice

The life-cycle hypothesis and the permanent-income hypothesis both assume that consumers seek to:

• A) increase consumption during expansions.
• B) minimize consumption during recessions.
• C) increase consumption during retirement
• D) smooth consumption over their lifetimes.

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Definitions:

Experimental Research

A scientific approach that seeks to determine cause-and-effect relationships by manipulating independent variables and observing their effects on dependent variables.

Independent Variable

In an experiment, the stimulus variable or condition the experimenter manipulates to learn its effect on the dependent variable.

Manipulated

Altered or controlled by someone or something in a skillful or sometimes deceitful manner.

Projective Tests

Psychological assessments that use ambiguous stimuli to uncover hidden emotions and internal conflicts.