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Let the Consumption Function Be Given by C = 80

Question 24

Multiple Choice

Let the consumption function be given by C = 80 + 0.9YDP with permanent disposable income specified according to YDP = 0.5YD + 0.3YD-1) + 0.2YD-2) . Two years after a permanent increase in income of $1,000, consumption will have increased by


A) $1,000.
B) $900.
C) $800.
D) $720.
E) $80.

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