Multiple Choice
If people base their spending decisions more on permanent income than current income,then:
A) consumption spending will be more responsive to a temporary change in income than a change in permanent income.
B) shifts in aggregate supply will be less predictable than if spending was based on current income.
C) consumption spending will fluctuate more widely than if such spending was determined by current income.
D) shifts in short-run aggregate supply will be more predictable than if spending was based on current income.
E) attempts to fine-tune the economy with temporary tax rate adjustments will be less effective.
Correct Answer:
Verified
Correct Answer:
Verified
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