With the aid of a diagram show that according to the relative income hypothesis, the short run average propensity to consume is greater than the long run average propensity to consume (10 marks) Explain why changes in consumption are unpredictable if consumers obey the permanent income hypothesis ...

The diagram shows that the shortrun average propensity to consume APC is higher than the longrun ave ...

With the aid of a diagram show that according to the relative income hypothesis, the short-run...

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Introductory Econometrics A Modern Approach

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Authors: Jeffrey M. Wooldridge

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Explain why changes in consumption are unpredictable if consumers obey the permanent-income hypothesis and have rational expectations.
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With the aid of a diagram show that according to the relative income hypothesis, the short-run...

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