According to the permanent income hypothesis, a temporary increase in income that does not affect average lifetime income would
A) cause no change in consumption.
B) cause a decrease in consumption and saving by the same amount.
C) cause an increase in consumption and saving by the same amount.
D) cause a large increase in consumption.
A
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The ancient Greek philosopher, Plato, concluded that in an ideal society the income of the richest person
a. would be equal to the income of the poorest person. b. would be no more than four times the income of the poorest person. c. would be reflective of the effort put forth by that person. d. would be taxed at a higher rate than the income of the poorest person.
The convergence theory states that:
A. poorer countries will grow faster than rich ones. B. rich countries will grow faster than poor ones. C. poor countries tend to converge together and stagnate. D. rich countries tend to leapfrog ahead maintaining the gap in global development.