Intertemporal choice theory is more consistent with ________.
A)Keynesian theory than the permanent income hypothesis of Friedman
B)the permanent income hypothesis than Keynesian theory
C)Keynesian theory than the life-cycle hypothesis
D)Keynesian theory than the Gini coefficient theory

Question

Quizplus · Accepted Answer

Intertemporal choice theory is more consistent with the permanent income hypothesis of Friedman, which posits that individuals make consumption decisions based on their average lifetime income. This is different from Keynesian theory, which focuses on short-term fluctuations in income and demand management policies. The life-cycle hypothesis also incorporates intertemporal choice, but places emphasis on the changing needs and earning potentials of individuals over time, rather than just average income. The Gini coefficient theory is unrelated to intertemporal choice theory, as it measures income inequality in a given period, rather than how individuals make consumption decisions over time.

Intertemporal Choice Theory Is More Consistent with ________