The key difference between the Keynesian theory of consumption and the permanent income is that
A) the Keynesian theory suggests that consumption and saving decisions are likely to be based on pre- tax income alone.
B) the permanent income theory suggests that consumption and saving decisions are likely to be based on current income alone.
C) the permanent income theory suggests that consumption and saving decisions are likely to be based on both current income and expectations of future income.
D) the Keynesian theory suggests that consumption and saving decisions are likely to be based on expectations of future income alone.
Correct Answer:
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Q1: In the 45° line diagram, which of
Q2: In the equation C = a +
Q3: The consumption function can be defined as
Q4: A theory of household consumption that assumes
Q6: The MPS is
A) the fraction of a
Q7: Which of the following factors will cause
Q8: Which of the following would not raise
Q9: Which of the following would not lower
Q10: If the MPS is 0.4, and savings
Q11: If the MPC is 0.8, and savings
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