The life cycle hypothesis explains the long run constancy of the savings rate and short run variability of savings rate provided
A) the proportions of working and retired people are constant in each historical era.
B) the saving behavior of each age group does not change from generation to generation.
C) A and B are both required to explain the apparent contradiction.
D) Friedman's PIH is in error.
C
You might also like to view...
When actual output exceeds potential output, there is ________ output gap and the inflation rate will ________.
A. an expansionary; be lower than the expected rate of inflation B. no; be equal to the expected rate of inflation C. an expansionary; exceed the expected rate of inflation D. a recessionary; exceed the expected rate of inflation
Assume the price of beer is $4, the price of pizza is $10 and the consumer's income is $250. Which consumption bundle will NOT be the consumers choice?
A) 5 beers, 5 pizzas B) 0 beers, 25 pizzas C) 25 beers, 15 pizzas D) None of the bundles will be chosen.
If demand in a perfectly competitive market decreases, supply will:
A. not change in the short run. B. increase in the long run. C. increase in the short run. D. decrease in the short run.
Ultimately, the change in unemployment associated with a change in inflation is due to
a. the shape of the long-run aggregate supply curve. b. unanticipated inflation, not inflation per se. c. anticipated inflation, not inflation per se. d. a change in the natural rate of unemployment.