According to the permanent income hypothesis, permanent income is to ________ as transitory income is to ________

Which of the following is an important assumption in the short-run macro model?

a. Government spending depends on income. b. Output does not change. c. Firms do not maintain inventories. d. Investment depends on income. e. Prices do not change.

A normal good is defined by economists to be a good

a. with a negatively-sloped demand curve. b. that is purchased by at least 75 percent of the population. c. that is bought by consumers with normal tastes. d. whose demand increases when incomes increase. e. whose demand decreases when incomes increase.