According to the permanent income hypothesis, how does your consumption change in each of the following scenarios? To keep things simple, suppose the interest rate is 10% and you will live forever. Feel free to give answers that involve approximations.
(a) A distant aunt that you never knew dies and leaves you $100,000 in her will.
(b) You receive an unexpected promotion today that raises your income permanently by $5,000 per year.
(c) To balance its budget, the government levies a onetime tax this year that costs you $10,000.
(d) You win a lottery, which pays you a onetime amount of $10 million today.
(e) You win a different lottery, which pays you a onetime amount of $10 million, but the payment is made 5 years from now.