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Preferences for Steady Consumption Paths Over Variable Consumption Paths Mean

Question 31

Multiple Choice

Preferences for steady consumption paths over variable consumption paths mean that


A) any permanent change in an individual's disposable income must generate either a change in the desired bequest or a comparable change in consumption.
B) the applicable marginal propensity to consume out of a permanent change in an individual's disposable income must be close to 1.
C) any temporary change in an individual's disposable income must generate only a small change in yearly consumption if it is to be spread out smoothly over a foreseeable lifetime.
D) all of the above.
E) a and c only.

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