Author Question: If households come to believe that permanent income has not changed ________. A) the impact of a ... (Read 53 times)

nmorano1 · **on:** Jun 30, 2018

If households come to believe that permanent income has not changed ________.

A) the impact of a change in taxes on spending will be limited
B) they will consume on the basis of their current income
C) their life-cycle will be affected
D) the impact of a given change in taxes on spending will be enhanced

Question 2

In the coordination failure model, the good equilibrium is characterized by a

A) higher real interest rate and a higher price level than the bad equilibrium.
B) higher real interest rate and a lower price level than the bad equilibrium.
C) lower real interest rate and a higher price level than the bad equilibrium.
D) lower real interest rate and a lower price level than the bad equilibrium.