According to the permanent-income hypothesis, a transitory increase in a person's income will
A) increase consumption more than savings.
B) increase savings more than consumption.
C) be smoothed out to where the increases in consumption and savings are roughly equal.
D) have the same effect on consumption as a permanent increase in income.
B
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When would the Fed want to carry out a monetary policy that decreases aggregate demand?
What will be an ideal response?
Money is the means of payment in the economy. Examples of money include
a. currency, checking account balances, and credit card limits b. ATM cards, checking account balances, and currency c. travelers' checks and credit card limits d. currency, stocks, and travelers' checks e. currency, travelers' checks, and personal checks
Suppose you win a small lottery and you are given the following choice: You can receive (1) an immediate payment of $10,000 or (2) two annual payments, each in the amount of $5,200, with the first payment coming one year from now, and the second payment coming two years from now. You would choose to take the immediate payment of $10,000 if the interest rate is
a. 2 percent, but not if the interest rate is 1 percent. b. 3 percent, but not if the interest rate is 2 percent. c. 4 percent, but not if the interest rate is 3 percent. d. 5 percent, but not if the interest rate is 4 percent.
Refer to the above figure. Which panel demonstrates the law of demand?
A. Panel A B. Panel B C. Panel C D. Panel D