Suppose a person calculates her permanent income by adaptive expectations. Last year's permanent income was 38,000, this year's actual income is 41,000, j = 0.30, and k = 0.86. What is her consumption expenditure this year?
A) 30,422
B) 12,174
C) 40,226
D) 38,774
E) 33,454
E
You might also like to view...
Jim has the following assets and liabilities:Credit Card balance$2,000Cash$500Government bonds$2,000Checking$750Car loan balance$5,000Car$15,000What is Jim's money demand?
A. $500 B. $1,250 C. $750 D. $3,250
Governments can increase the consumption of a product that helps in reducing negative externalities by
A) subsidizing the purchase of the product. B) taxing the consumption of the product. C) assigning property rights to the producer of the product. D) taxing the production of the product.
Within the framework of the aggregate expenditures model, what will happen if an economy is operating at a real GDP greater than full-employment real GDP?
a. An inflationary gap exists. b. Real GDP will fall. c. The inventories of firms will rise. d. Firms will cut back on their current rate of output.
Which of the following is an example of a trade-off?
a. Dev buys more cheese puffs than kale chips even though kale chips are healthier. b. Lin decides to stop buying groceries from the local market because the prices are too high. c. Khalil loves to drink a premium brand of sparkling water; to afford it, he buys cheaper toilet paper. d. Nicole has to call a friend to remind her of which brand of kombucha is the healthiest and best tasting.