Questions
Questions

Princip of Econ-Microeconomics Quiz 13

Multiple choice

Why would the economics discipline assume that generally people have a positive rate of time preference? (mark all that apply)

Options
A.Young consumers generally have lower income than they expect to have in the future, so money today is more valuable to them than money in the future.
B.Money/resources can be used to innovate and create more value in the future (investment by businesses).
C.The future is uncertain, so consumers value money today more than money in the future.
D.Young consumers generally prefer money in the future than money in the present because they are young and have many years ahead of them.
E.Future money and present money are the same: a dollar is the same today as it is one year from now.
View Explanation

View Explanation

Verified Answer
Please login to view
Step-by-Step Analysis
To unpack the question, we’re considering why the economics discipline tends to assume people have a positive rate of time preference, and we’re evaluating each statement. Option 1: 'Young consumers generally have lower income than they expect to have in the future, so money today is more valuable to them than money in the future.' This reflects a common intuition in time-preference theory: individuals discount future consumption relative to present consumption due to present needs, uncertainty, and life-cycle income profiles. If current income is low relative to futur......Login to view full explanation

Log in for full answers

We've collected over 50,000 authentic exam questions and detailed explanations from around the globe. Log in now and get instant access to the answers!

Similar Questions

A household must decide between consuming today, C1, and consuming tomorrow, C2. The intertemporal budget constraint for this household is: C1 + C2/R = Y1 + Y2/R. The life-time utility function of this household is: U(C1,C2) = log C1 + beta*log C2. If the parameter beta<1, then the household is _____ and _____.    

Bruce has a personal interest rate (discount rate) of 5% when making decisions, and Alfred has a personal interest rate (discount rate) of 8% when making decisions. Based on this information, we know that Bruce places _____ value on the future benefits & costs of his decisions compared with Alfred.

A person who greatly prefers present consumption to future consumption has a(n) __________ rate of time preference.

In a consumer society, many adults channel creativity into buying things

More Practical Tools for Students Powered by AI Study Helper

Join us and instantly unlock extensive past papers & exclusive solutions to get a head start on your studies!