For each of the following scenarios, predict how consumption changes for both consumption smoothers and hand-to-mouth consumers. How does total consumption change?

a. Household incomes rise 6% this year, but income growth is expected to return to its normal growth rate of 2% next year.

b. A country with an economy based heavily on agricultural production experiences a natural disaster so severe that it will take decades for farmers to recover.

c. People expect the economy to experience a recession over the next six months.