As a part of the tax cut package signed into law on December 17, 2010, the government reduced the employee portion of the payroll tax from 4% to 2% for 2011. According to the permanent-income hypothesis, households that smooth consumption will
A) use all of the extra income generated by this tax reduction for consumption during 2011.
B) use a large portion of the extra income generated by this tax reduction for consumption during 2011.
C) use most of the extra income generated by this tax reduction as saving during 2011.
D) split the income evenly between consumption and saving during 2011, since the tax cut will expire after one year and consumption is smoothed.
C
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The above figures show the market for HD televisions. If there are severe earthquakes that destroy a significant number of HD television manufacturing plants, which figure shows the effect of the earthquake?
A) Figure A B) Figure B C) Figure C D) Figure D E) None of the figures represent this change.
In the foreign-exchange market, trading
A) is restricted to the hours 10 A.M. to 3 P.M. New York time. B) may not take place after 5 P.M. London time. C) takes place at any hour of the night or day. D) takes place at prices set by the U.S. government in consultation with the governments of other leading countries.