The life-cycle theory of consumption predicts that when a person anticipates a higher income in the future, then that person will
A) consume more and save less in the current period.
B) consume less and save more in the current period.
C) consume less and save less in the current period.
D) not change the amount of consumption or saving in the current period.
A
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Because it is difficult to negotiate multilateral trade agreements, some economists argue that preferential trade agreements are always beneficial since they represent a movement toward freer trade, which is better than no movement at all. Is this argument always correct?
a. Yes; any movement toward freer trade is better than no movement at all. b. No; some preferential trade agreements may have higher trade diversion costs than trade creation gains. c. Yes; all preferential trade agreements have higher trade creation gains than trade diversion losses. d. No; all preferential trade agreements have higher trade diversion losses than trade creation gains.
Bill and Krista sell potted plants from a roadside stand. The figure above shows Bill and Krista's marginal cost curve and the market price. If Bill and Krista sell 60 plants per week at $8 per plant, their producer surplus from all their plants is
A) $8. B) $480. C) $240. D) $0. E) More information is needed to answer the question.