Multiple Choice
Liquidity constraints explain
A) why consumers may spend less than the permanent-income theory predicts as their current income falls
B) why consumption may increase more than the life-cycle hypothesis predicts when income recovers after a recession
C) why consumers may sometimes behave in a manner predicted by the simple Keynesian consumption function
D) all of the above
E) none of the above
Correct Answer:
Verified
Correct Answer:
Verified
Q2: If a worker gets a large one-time
Q3: Assume the government announces an income tax
Q4: The fact that consumption exhibits "excess sensitivity"
Q5: The random-walk theory of consumption predicts that<br>A)the
Q6: The life-cycle theory of consumption implies that<br>A)the
Q8: According to the permanent-income theory of consumption<br>A)permanent
Q9: The debate about different consumption theories can
Q10: The Barro-Ricardo equivalence proposition<br>A)states that debt-financing merely
Q11: The Barro-Ricardo equivalence proposition implies that tax
Q12: The proposition that financing debt by issuing