Suppose that medical researchers discover a new drug which slows the aging process allowing the average life span in the United States to increase to 95 years of age. The lifecycle hypothesis suggests that
A) consumption spending would increase since lifetime income increases.
B) consumption spending would increase since estimates of permanent income would increase.
C) consumption spending would decrease since savings would rise to provide income for the longer retirement periods.
D) None of the above is correct since predicted future annual incomes may not change.
C
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You have probably used this good, and some use it everyday. It was invented by John Pemberton in 1886
a. Coca-Cola b. aspirin c. instant camera d. sliced bread e. waxed paper
The production possibilities curve represents
A. society's needs. B. all possible combinations of total output that can be produced. C. the trade-off between human capital and physical capital that exists. D. the total amount of stocks and bonds that exist in the economy.