How much consumption rises today

Reference no: EM132118756

Question: The permanent-income theory of consumption:

(a) Answer given in exercise.

(b) This one should be relatively easy. Consumption rises today and in the future by a constant amount. How much? Your income has gone up by $5,000 per year, so your consumption rises by this same amount each year. Parts (c), (d), and (e) are left as exercises for the student.

Reference no: EM132118756

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