Consumption Is Most Likely to Respond One-For-One with Changes in Current

Multiple Choice

Consumption is most likely to respond one-for-one with changes in current income when

A) the change in current income results from a one-time bonus.
B) people believe the change in their current income is temporary.
C) people are able to borrow as much as they wish, as long as they pay it back.
D) the change in current income is caused by the business cycle.
E) none of the above