The PIH and LCH theories ________ the case for activism,while the procyclical behavior of consumer spending for durable goods ________ the case for activism.

Question

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The PIH (Permanent Income Hypothesis) and LCH (Life Cycle Hypothesis) theories do not support the case for activism as they suggest that individuals base their consumption decisions on their expected future income rather than current changes in disposable income. On the other hand, the procyclical behavior of consumer spending for durable goods supports the case for activism as it suggests that during economic downturns or recessions, consumers are less likely to spend on durable goods, and therefore government intervention through fiscal policies (such as providing stimulus packages) can help stimulate the economy.

The PIH and LCH Theories ________ the Case for Activism,while