Modigliani's consumption function differs from both Friedman's and Keynes' function in which of the following?
A) It is based on forward looking expectations.
B) It is based on disposable income received over time.
C) It is based on the value of assets accumulated over time.
D) It is based on disposable income or permanent income.
C
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The Lucas Wedge is estimated to
A) total over $406,000 per person as a result of the slowdown in the growth rate of real GDP. B) be positive in some years and negative in others. C) be about 2 percent of real GDP per year. D) be negative due to the severe recession in 2008-2009. E) have reached about $13,000 per person in the last year.
If, for a producer, large changes in price lead to relatively small changes in quantity, the producer's
A) demand is price elastic. B) demand is price inelastic. C) supply is price elastic. D) supply is price inelastic.