Explain why changes in consumption are unpredictable if consumers obey the permanent-income hypothesis and have rational expectations.

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Macroeconomics

ISBN: 978-1464168505

5th Canadian Edition

Authors: N. Gregory Mankiw, William M. Scarth

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Question Posted: Dec 31, 2015 01:40 AM

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Explain why changes in consumption are unpredictable if consumers obey the permanent-income hypothesis and have rational expectations.

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The permanentincome hypothesis implies that consumers try to smooth consump...View the full answer

Macroeconomics

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