The permanent-income hypothesis can reconcile the cross-section and time-series consumption studies by incorporating the reasonable assumption that at any one time many people are rich because they are enjoying unusually high ________ income, causing
them to have an unusually ________ saving ratio. A) permanent, high
B) permanent, low
C) transitory, high
D) transitory, low
C
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For which of the following questions would consumer sovereignty provide an answer?
a. Will a shovel or bulldozer be used to excavate the ground? b. Should the government provide trash collection services in the community? c. Should we have universal health coverage provided by the government? d. Will large or small cars sell the most this year? e. Should there be numerous competitors offering long-distance phone service to the consumer?
The kinked demand curve explains
A. How an oligopoly can achieve monopoly profits. B. The consequences of the interdependent behavior of oligopolists. C. Why oligopolists are more sensitive to cost changes than are competitive markets. D. Price-fixing along the elastic part of the demand curve and predatory pricing on the inelastic portion.