The theory of intertemporal choice,and the life-cycle and permanent income hypotheses have in common the assumption that ________.
A)consumption decisions are affected by current expectations about lifetime resources
B)consumption decisions are based on all available information
C)current income,rather than expected income,has the greater influence on consumption decisions
D)decisions to borrow and save are influenced much more by immediate circumstances than by long-term consequences

Question

Quizplus · Accepted Answer

The theory of intertemporal choice, life-cycle hypothesis, and permanent income hypothesis all share the assumption that consumption decisions are affected by current expectations about lifetime resources, which means individuals make consumption choices based on their current expectations of future income and resources.

The Theory of Intertemporal Choice,and the Life-Cycle and Permanent Income