The permanent income hypothesis

Assignment Help Microeconomics

Reference no: EM13193646

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.

Reference no: EM13193646

Questions Cloud

What is the half-life of strontium 90 : Strontium 90 is a radioactive material that decays according to the function A(t)=Ae^(-.0244t), where A is the initial amount present and A is the amount present at time t (years). What is the half-life of strontium 90? The answer is 28.4 years. H..

The glorious revolution : The Glorious Revolution impacted not only the mother country but also the colonies. What was the Glorious Revolution, what was its political impact in England, and how did it help shape the ideology of American colonists?

Compute the probability that the can falls off : find a formula for Fx(X) and use this to compute the probability that the can falls off at a point on the first 319 feet of the belt.

Why is it important for a nonprofit to measure performance : Why is it important for a nonprofit to measure performance? Which performance measures do you think are most beneficial for a nonprofit organization to use?

The permanent income hypothesis : to the permanent income hypothesis, households will tend to react to a temporary tax cut by assuming the new tax level will be permanent.

Desk clerks-hotel managers-valets and housekeepers : Given what you know about the Hotel Paris? strategic goals, list 3-4 specific behaviors you would incentivize for each of the following groups of employees: front desk clerks, hotel managers, valets, and housekeepers

How far is the plane from the staring point : A plane flies 45 minutes at 150mph on a bearing of 35 degrees. It then turns and flies 90 minutes at the same speed on the bearing of 125 degrees. How far is the plane from the staring point?

Orthopedic surgeon for severe hip pain : Mr. Jones is admitted to the hospital by an orthopedic surgeon for severe hip pain. The ortho surgeon provides an initial hospital visit during which it is determined that Mr. Jones has a fractured hip that will require surgical intervention.

Composition of earth''s interior : All of the following provide evidence or clues to the composition of earth's interior except for

User Account

All Pages