${?}^{}$ Consumption and Saving $-$ End of Chapter Problem

For each of the accompanying scenarios, fill in the blanks to predict how consumption changes for both consumption smoothers and hand$-$to$-$mouth consumers. How does total consumption change? In each scenario, assume the economy consists of an equal portion of consumption smoothers and hand$-$to$-$mouth consumers.

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

i$.$ For consumption smoothers, the consumption amount.

ii$.$ For hand$-$to$-$mouth consumers, the consumption amount.

iii. The total consumption

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.

i$.$ For consumption smoothers, the consumption amount.

ii$.$ For hand$-$to$-$mouth consumers, the consumption amount.

iii. Total consumption amount.