If Consumers Correctly Anticipate Their Future Incomes

question 56

Multiple Choice

If consumers correctly anticipate their future incomes:

• A) the saving rate will be high when consumers anticipate a boom.
• B) the saving rate will be low when consumers anticipate a boom.
• C) the saving rate will be low when consumers anticipate a recession.
• D) they will be disappointed because future income can never be correctly forecasted.

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Definitions:

Contract Law

The body of law that governs the creation, enforcement, and interpretation of agreements between parties.

Jurisdictions

The official power to make legal decisions and judgments, often within a specified geographic area or over certain types of legal cases.

Guarantee

A legal commitment to assume responsibility for another's debt or obligations if that individual fails to meet them.

Indemnity

A contractual agreement in which one party agrees to compensate for any losses or damages suffered by another.