Question

QUESTION 23

1. The "life cycle" and "permanent income" theories of consumption share which of the following features?

   	A.	Consumption spending depends on income, rather than wealth.
   	B.	Consumption spending should fluctuate widely from year to year.
   	C.	Consumers look ahead to the future in making current spending decisions.
   	D.	all of the above

2. QUESTION 21

3. In the Phillips curve equation, which of the following will cause an increase in the current inflation rate?

   A.

   an increase in the expected inflation rate

   B.

   a reduction in the unemployment rate

   C.

   an increase in the markup, m

   D.

   all of the above

   QUESTION 19

   In the IS-LM-PC model, investment does not depend on

   	A.	T.
   	B.	Y.
   	C.	r.
   	D.	q

   please answer all three questions kindly..thanks

Answer 1

C. Consumers look ahead to the future in making current spending decisions.

The theory is that individuals seek to smooth consumption throughout their lifetime by borrowing when their income is low and saving when their income is high.

The permanent income hypothesis is a theory of consumer spending stating that people will spend money at a level consistent with their expected long-term average income

D. all of the above

Increase in expected inflation rate increases the actual inflation rate. When employment rate is reduced, the inflation increases as movement along the philips curve occurs towards left. Increase in markup also increases inflation.

A. T

Investment does not depends on the taxes as it is manily induced by the interest rate no matter what taxes are.