Consumers with Time-Inconsistent Preferences

question 32

Multiple Choice

Consumers with time-inconsistent preferences:

• A) base consumption decisions on transitory rather than permanent income.
• B) seek to consume more in retirement than during their working years.
• C) may alter decisions simply because time passes.
• D) face borrowing constraints that prevent rational behavior.

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Definitions:

UCS

Unconditioned Stimulus, an aspect of classical conditioning theory, referring to a stimulus that naturally triggers a reflexive or involuntary response without prior learning.

CS

Stands for Conditioned Stimulus in classical conditioning; a neutral stimulus that, after being repeatedly paired with an unconditioned stimulus, becomes able to elicit a conditioned response.

CR

Conditional Reflex; a learned response to a specified stimulus.

Social Learning Theory

A theory that posits individuals learn behaviors by observing and imitating others, influenced by punishments and rewards.