Consumption Is Said to Follow a Random Walk If

question 55

Multiple Choice

Consumption is said to follow a random walk if:

• A) consumers have rational expectations.
• B) consumption is proportional to permanent income.
• C) changes in consumption are unpredictable.
• D) changes in consumption produce secular stagnation.

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Definitions:

Technical Analysts

Financial professionals who evaluate securities by analyzing statistics generated by market activity, such as past prices and volume.

Stock Prices

The current market price at which shares of a company can be bought or sold.

Reversal Effect

Describes a phenomenon in finance and economics where an observed trend or pattern in market prices reverses direction over a certain period.

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A strategy or action where investors purchase bond securities, typically as a means of diversifying a portfolio or securing fixed income returns.