2. Suppose that an individual receives news that they have to pay a one time find for speeding today (their income today decreases), which of the following would be behavior consistent with the permanent income hypothesis (a) Decrease Consumption today by less than the full amount of the fine (b) Decrease Consumption today by the full amount of the fine (c) Decrease Savings today by less than the full amount of the fine (d) Increase Savings today by less than the full amount of the fine (e) No change in savings today

2. Suppose that an individual receives news that they have to pay a one time find for speeding today (their income today decreases), which of the following would be behavior consistent with the permanent income hypothesis (a) Decrease Consumption today by less than the full amount of the fine (b) Decrease Consumption today by the full amount of the fine (c) Decrease Savings today by less than the full amount of the fine (d) Increase Savings today by less than the full amount of the fine (e) No change in savings today

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter16: Information, Risk, And Insurance

Section: Chapter Questions

Problem 10RQ: In an insurance system, would you expect each person to receive in benefits pretty much what they...

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