Imagine there is a consumption smoother (also known as a PIH consumer) who expects to live for another 40 years and to work for another 30 years. They just learned that they will receive a permanent pay increase from their job of $800. How much extra do they consume this year? What is their marginal propensity to consume?

Imagine there is a consumption smoother (also known as a PIH consumer) who expects to live for another 40 years and to work for another 30 years. They just learned that they will receive a permanent pay increase from their job of $800. How much extra do they consume this year? What is their marginal propensity to consume?

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section: Chapter Questions

Problem 7TY

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