According to the permanent income hypothesis,households will tend to react to a temporary tax cut by
A) assuming the new tax level will be permanent.
B) saving most of the additional disposable income.
C) increasing consumption sharply in response to the higher disposable income.
D) temporarily increasing their marginal propensity to consume.
Correct Answer:
Verified
Q114: If the MPC is three quarters,then an
Q115: If we save 20 percent of our
Q116: If the APC is .6,we consume
A)4 percent
Q117: If the APS is .1,we save
A)1 percent
Q118: According to Friedman's "permanent income hypothesis,"
A)Consumption today
Q120: If we consume 85 percent of our
Q121: In this graph,the MPC is
A).25.
B).5.
C).75.
D)1.00.
Q122: In this graph,consumption is at a level
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