Question

In the model with uncertainty, suppose we have

s=b and z=zH

what will be the relationship between expected consumption and actual consumption?

Question 12 options:

	the relationship is unclear - we need more information about preferences.
	expected consumption will be less than actual consumption.
	expected consumption will be greater than actual consumption.
	they will be equal.

Answer 1

In the model with uncertainty, suppose we have s=b and z=zH.

What will be the relationship between expected consumption and actual consumption?

question has options:

1. the relationship is unclear - we need more information about prefrences.

2. expected consumption will be less than actual consumption.

3. expected consumption will be greater than actual consumption.

4. they will be equal.

Answer: option 1. the relationship is unclear - we need more inofrmation about prefrences.