2. Suppose that an individual receives news that they have to pay a one time find for speeding today (their income today decreases), which of the following would be behavior consistent with the permanent income hypothesis (a) Decrease Consumption today by less than the full amount of the fine (b) Decrease Consumption today by the full amount of the fine (c) Decrease Savings today by less than the full amount of the fine (d) Increase Savings today by less than the full amount of the fine (e) No change in savings today

2. Suppose that an individual receives news that they have to pay a one time find for speeding today (their income today decreases), which of the following would be behavior consistent with the permanent income hypothesis (a) Decrease Consumption today by less than the full amount of the fine (b) Decrease Consumption today by the full amount of the fine (c) Decrease Savings today by less than the full amount of the fine (d) Increase Savings today by less than the full amount of the fine (e) No change in savings today

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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