Problem
1. Give two reasons why consumption is more variable in the data than theory seems to predict.
2. What are the effects of an increase in future income on consumption in each period, and on savings?
3. What produces a larger increase in a consumer's current consumption, a permanent increase in the consumer's income or a temporary increase?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.