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4. Explain why successor gamblers (and thieves)might be expected to live longer 5. What are the similarities between the life-cycle and the permanent-income hypotheses? Do
4. Explain why successor gamblers (and thieves)might be expected to live longer 5. What are the similarities between the life-cycle and the permanent-income hypotheses? Do they differ in their approaches to explaining why the long-run MPC is greater than the short-run MPC? 6. The United States, during the 1980s, found its rate of personal saving to be particularly low. It also, during that time, had a demographic blip -the baby-boomer generation, then in its late 20s to early 30s. a. Does the life-cycle hypothesis suggest a reason that these two facts might be connected? b. What does this hypothesis suggest we should see as this generation ages? 7. Rank the following marginal propensities to consume: a. Marginal propensity to consume out of permanent income. b. Marginal propensity to consume out of transitory income. C. Marginal propensity to consume out of permanent income when consumers are liquidity-constrained. d. Marginal propensity to consume out of transitory income when consumers are liquidity-constrained
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