Ayushi Asked a Question
August 12, 2020 2:14 pmpts 30 pts
40. The permanent income bypöthesis that establishes relationship between permanent income and permanent consunption #rgues that the relationship depends on (1) Rate of interest, future expectations and taste & preference (2) Rate of interost, ratio of non human wealth to income and taste & pre- ference (3) Rate of interest, transitory income and taste & preferenoe (4) Rate of interest, retum on human capital and taste & preference 41. According to the Keynesian model, equilibrium output of an economy may be less than the full-employment level of output because at full employment (1) Suffictent ineome may not be geneirated to keep workers above the subsis- tence level (2) There might not be enough demand by fims and consumers to buy that output (3) Workers may not be willing to work the hours necessary to produce the Output (4) Interest rates might not be high enough to provide the incentive to finance the production
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  • Nidhi taparia Best Answer
    40. The correct answer is (2). According to this theory, C = kY where C = permanent consumption Y = permanent income and k = a function of rate of interest, proportion of non hum...
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