If consumption spending this year c1 and next year c2 were, Ask an Expert

Economics

If consumption spending this year (C1) and next year (C2) were perfect complements, would the permanent income hypothesis still hold, in the sense that the consumer would not increase spending by the full amount of a transitory income shock, but would instead smooth consumption across periods? Explain using a diagram.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91822917

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