The Idea That a Permanent Increase in Income Causes a Larger

question 66

Multiple Choice

The idea that a permanent increase in income causes a larger increase in consumption than a temporary change in income is called the

• A) Friedman-Lucas theory.
• B) permanent income hypothesis.
• C) Ricardian equivalence theorem.
• D) intertemporal substitution effect.
• E) steady state theorem.

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Definitions:

Determinism

The idea in philosophy that every event and moral decision is fully caused by preceding factors.

Predict

To declare or indicate in advance; to forecast the occurrence of something.

Experimental Method

A research method involving the manipulation and control of variables to study causality.

Determinism

The philosophical belief that all events, including moral choices, are completely determined by previously existing causes.