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Which of the following will have the largest increase on current consumption? O a. An agent who obeys the permanent income hypothesis receives an expected
Which of the following will have the largest increase on current consumption? O a. An agent who obeys the permanent income hypothesis receives an expected salary bonus of one dollar. O b. An agent who knows that taxes will increase one dollar in the future receives a tax break of one dollar in the current period. O c. An agent is worried she will lose a dollar of income this period, so she engages in precautionary saving. d. An agent with a binding borrowing constraint unexpectedly finds a dollar on the floor. O e. The answer depends on the fiscal multiplier
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