Let C = 100 + 0

question 20

Multiple Choice

Let C = 100 + 0.9YDp) reflect a consumption function with YDp) representing the individual's view of permanent disposable income; let permanent income be defined by YDp) = 0.5YD-0) + 0.25YD-1) +
0) 25YD-2) with YD-j) notationally representing disposable income lagged j years. If disposable income were $10,000 in each of three successive years-0, 1, and 2-then consumption in year 4 would equal

• A) $9,000.
• B) $9,100.
• C) $10,000.
• D) $10,100.
• E) an amount that cannot be determined from the information provided.

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Definitions:

Economist

A professional who studies economic theories, models, and principles to analyze how societies use resources and distribute goods and services.

Production Process

The series of steps involved in the creation of a product or service, from the input of raw materials to the final output.

Factors Of Production

The inputs used in the production of goods or services to make an economic profit, including land, labor, capital, and entrepreneurship.

Productivity

The measure of how efficiently goods and services are produced, often quantified as output per unit of input.