The sensitivity of current consumption to changes in current income arises from
A) liquidity constraints
B) the close relation between current consumption and permanent income
C) income changes that tend to be mostly random and unpredictable
D) the close relation between current and lagged consumption
E) none of the above
Correct Answer:
Verified
Q35: The fact that consumption exhibits "excess sensitivity"
Q36: The random-walk theory of consumption predicts that
A)the
Q37: Hall's random walk-theory of consumption states that
Q38: According to the permanent-income theory, which of
Q39: Actual consumption behavior exhibits both "excess smoothness"
Q41: When examining the impact of changes in
Q42: The Barro-Ricardo equivalence proposition implies that tax
Q43: The proposition that financing debt by issuing
Q44: Assume the government announces an income tax
Q45: If the interest rate increases,
A)consumption of non-durable
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