Question the permanent-income theory of consumptiona answer, Ask an Expert

Economics

Question: The permanent-income theory of consumption:

(a) Answer given in exercise.

(b) This one should be relatively easy. Consumption rises today and in the future by a constant amount. How much? Your income has gone up by $5,000 per year, so your consumption rises by this same amount each year. Parts (c), (d), and (e) are left as exercises for the student.

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M93106224

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