Characteristic of consumption; consumption does not change enough in response to unpredictable changes in income.
a. liquidity constraint
b. excess sensitivity
c. excess smoothness
. Constraints on people's ability to borrow money at the market interest rate are referred to as
a. liquidity constraints
b. budget constraints
Question 1 The correct option is: a. liquidity constraint In the presence of liquidity constraints consumers cannot borrow... View the full answer