If People Base Their Spending Decisions More on Permanent Income

question 90

Multiple Choice

If people base their spending decisions more on permanent income than current income,then:

• A)consumption spending will be more responsive to a temporary change in income than a change in permanent income.
• B)shifts in aggregate supply will be less predictable than if spending was based on current income.
• C)consumption spending will fluctuate more widely than if such spending was determined by current income.
• D)shifts in short-run aggregate supply will be more predictable than if spending was based on current income.
• E)attempts to fine-tune the economy with temporary tax rate adjustments will be less effective.

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Definitions:

Empowered Teams

Groups given the authority and responsibility to make decisions and implement them within their areas of operation.

Associates

individuals with whom one is connected in a professional or personal capacity, often implying a degree of collaboration or mutual interest.

Sponsor

An individual or organization that supports a project, event, or individual, often providing funding or resources.

Lattice Structure

An organizational structure characterized by cross-functional and cross-hierarchical networks, allowing for more flexible coordination and communication than traditional hierarchies.