The life-cycle theory of consumption predicts that when Jason anticipates a higher income in the future, then Jason will
A. consume less and save more in the current period.
B. not change the amount of consumption or saving in the current period.
C. consume more and save less in the current period.
D. consume less and save less in the current period.
Answer: C
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Under the current Social Security system, married persons may draw benefits based on
a. only their own earnings. b. their own earnings or draw 50 percent of the benefits earned by their spouse. c. their own earnings plus 50 percent of their spouse's earnings. d. their own earnings plus 100 percent of their spouse's earnings.
If a monopolistically competitive firm is earning profits in the short run:
A. it is acting like a perfectly competitive firm. B. other firms have an incentive to enter the market. C. barriers to entry will allow the firm to enjoy them in the long run as well. D. it should leave the industry before it gets competed away.
If the opportunity costs of producing a good increase as more of that good is produced, the economy's production possibility frontier will be
A. a negatively sloped straight line. B. negatively sloped and "bowed inward" toward the origin. C. negatively sloped and "bowed outward" from the origin. D. a positively sloped straight line.
If a positive externality exists in the provision of education when education is provided in a perfectly competitive market without government intervention, at the market equilibrium level of education:
A. the marginal social benefit of education equals the marginal social cost. B. additional net gains to society are possible by raising the level of education. C. additional net gains to society are not possible by either increasing or decreasing the level of education. D. additional net gains to society are possible by reducing the level of education.