When current income includes negative transitory component, relating consumption with current income will produce
A. an average propensity to consume that is lower than the long run average propensity to consume.
B. an average propensity to consume that is higher than the average long run propensity to consume.
C. an average propensity to consume that equals the long run average propensity to consume.
D. None of the above
Answer:B
When current income includes negative transitory component, relating consumption with current income will produce
A. an average propensity to consume that is lower than the long run average propensity to consume. B. an average propensity to consume that is higher than the average long run propensity to consume. C. an average propensity to consume that equals the long run average propensity to consume. D. None of the above