Business, 03.12.2019 23:31, jcutler2751

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.

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.

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According to the permanent-income hypothesis, how does your consumption change in each of the follow...