Actual consumption behavior exhibits both "excess smoothness" and "excess sensitivity," which means that
A)consumption responds too strongly to surprise changes in income
B)consumption responds too little to predictable changes in income
C)consumption always follows a random walk
D)consumption always adjusts with long lags
E)none of the above

Question

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The Answer of Actual consumption behavior exhibits both "excess smoothness" and "excess sensitivity," which means that
A)consumption responds too strongly to surprise changes in income
B)consumption responds too little to predictable changes in income
C)consumption always follows a random walk
D)consumption always adjusts with long lags
E)none of the above

Actual Consumption Behavior Exhibits Both "Excess Smoothness" and "Excess Sensitivity