Which of the following theories predicts that current consumption increases when a person expects an increase in future income?
A) the life-cycle theory of consumption B) the Keynesian theory of consumption
C) the permanent income hypothesis D) all of the above
D
You might also like to view...
Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher
Refer to Table 14-9. In order to maximize profit, the firm will produce a level of output where marginal cost is equal to
a. $6. b. $7. c. $8. d. $9.
If you burn your trash in the backyard in spite of regulations against it, then you are
A) acting economically irrationally and creating a social cost. B) acting rationally and creating a positive externality. C) saving landfill space and creating a social benefit. D) avoiding the private costs associated with disposing your trash some other way and creating a social cost.
If wages and prices are flexible and expectations are formed rationally, an increase in the money supply will cause
A) real wages to rise. B) real wages to fall. C) nominal wages to rise. D) nominal wages to fall.