According to the permanent income hypothesis,
a) consumption responds only to changes in current income
b) consumption responds more to expected future changes in income than to current income
c) consumption responds more to temporary changes in income than to permanent changes
d) consumption responds more to lifetime income than to current income
e) consumption is a function of previous income
d) consumption responds more to lifetime income than to current income
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When income increases from $20,000 to $30,000 the number of home delivered pizzas per year increases from 22 to 40. The income elasticity of demand for home delivered pizza equals
A) 1.45. B) 0.69. C) 0.58. D) 0.40. E) 2.86.
Refer to Figure 6-9. The data in the diagram indicates that DVDs are
A) luxury goods. B) inelastic goods. C) necessities. D) both luxury goods and inelastic goods. E) both necessities and inelastic goods.
If a nation borrows $250,000 each year for five consecutive years, the absolute value of the government deficit is _____
a. $500,000 b. $750,000 c. $250,000 d. $1,250,000
The proposal to place a tax on soda is intended to address what insight about human behavior?