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:

Immune Response

The body's defense mechanism against foreign substances or pathogens, involving both innate and adaptive responses.

Ruminating

The repetitive and passive focus on symptoms of distress and its possible causes and consequences, rather than solutions.

Negative Outlook

A pessimistic perspective where one typically expects unfavorable outcomes.

Obesity

A health disorder marked by an abnormal amount of body fat which elevates the likelihood of encountering health issues.