Question
According to the permanent income hypothesis, how will the paths of borrowing and consumption change in response to: (a) A temporary decrease in income when
According to the permanent income hypothesis, how will the paths of borrowing and consumption change in response to:
(a) A temporary decrease in income when it occurs.
(b) A permanent decrease in income when it occurs.
(c) Are the answers different if the changes in income are unanticipated,i.e. if they are 'news'? Comment on the size of the marginal propensityto consume.
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Public Administration And Law
Authors: David H Rosenbloom, Rosemary O'Leary, Joshua M Chanin
3rd Edition
1439803986, 9781439803981
