Suppose an Individual Experiences a $20,000 Increase in Real Income

question 6

Multiple Choice

Suppose an individual experiences a $20,000 increase in real income and the individual believes this increase in income is permanent.Economic theory suggests that this individual's current consumption will

• A)remain unchanged.
• B)increase by more than $20,000.
• C)increase by at most $20,000.
• D)decrease or remain unchanged, depending on the value of the real interest rate.
• E) decrease, remain unchanged, or increase, depending on the value of the real interest rate.

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