19. The “life cycle” and “permanent income” theories of consumption share which of the following features? (A) Consumption spending depends on income, rather than wealth. (B) Consumption spending should fluctuate widely from year to year. (C) Consumers look ahead to the future in making current spending decisions. (D) all of the above (E) none of the above

5. Suppose a consumer buys two goods, x and y , and has income of $30. Initially and the consumer chooses basket A with x =5 and y= 5. The prices change to and the consumer chooses basket B with x = 1 and y = 13. (A) These choices are not consistent with utility maximization. (B) With this information it is not possible to determine if these choices are consistent with utility maximization. (C) These choices are consistent with utility maximization. (D) Basket B must be strictly preferred to basket A .

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