The Behavior of Consumers Spreading Increases in Income Earned in One

question 23

Multiple Choice

The behavior of consumers spreading increases in income earned in one period into increases in consumption over several periods is known as:

• A) random-walk consumption.
• B) transitory consumption.
• C) consumption smoothing.
• D) the income effect.

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Definitions:

Optimist

A person inclined to anticipate the best possible outcome, maintaining a hopeful and positive outlook on life and future events.

Pessimist

An individual who tends to see the worst aspect of things or believe that the worst will happen.

Reactivity

The tendency of individuals to change their behavior in response to being observed or knowing they are being studied.

Hardiness

A personality trait characterized by a sense of control, commitment, and challenge in the face of stress, acting as a buffer against stress-related disorders.