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

[nmorano1]

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.

[ebenov]

Answer to Question 1

A

Answer to Question 2

D

[nmorano1]

Thanks for the timely response, appreciate it

[rachel]

YES! Correct, THANKS for helping me on my review