1) According to the permanent income hypothesis, consumption spending depends largely on ________. A) current income. B) the savings rate. C) a consumer’s lifetime resources. D) the level of current income plus the value of the assets owned by the household. 2) The permanent income hypothesis highlights the phenomenon of ________. A) the intertemporal budget constraint B) a binding borrowing constraint C) autonomous consumption D) consumption smoothing 3) According to the permanent income hypothesis, permanent income is to ________ as transitory income is to ________. A) consumption; saving B) certain; hypothetical C)Â wealth; gambling D) saving; borrowing 4) If households come to believe that permanent income has not changed ________. A) the impact of a change in taxes on spending will be limited. B) they will consume on the basis of their current income. C) their life-cycle will be affected. D) the impact of a given change in taxes on spending will be enhanced. 5) In the permanent income hypothesis, income that does not persist for a long period of time is known as ________. A) current income. B) transitory income. C) insufficient income. D) limited income. 6) In the permanent income hypothesis, income is divided into ________. A) current and future income. B) future and transitory income. C) transitory and permanent income. D) permanent and current income. 7) According to the permanent income hypothesis, the impact of ________. A) a change in permanent income on consumption is greater than the impact resulting from a change in transitory income. B) a change in transitory income on consumption is greater than the impact resulting from a change in permanent income. C) a change in transitory income is felt primarily through changes in the total tax revenue paid to the federal government. D) a change in permanent income on consumption is larger than the impact resulting from a change in future income. 8) Intertemporal choice theory is more consistent with ________. A) Keynesian theory than the permanent income hypothesis of Friedman. B) the permanent income hypothesis than Keynesian theory. C) Keynesian theory than the life-cycle hypothesis. D) Keynesian theory than the Gini coefficient theory. 9) The effect of the February 2008 tax rebate on spending was reduced due to ________. A) the simultaneous missteps in monetary policy. B) the negative impact of the policy on saving rates. C) the recognition that the rebate did not constitute a permanent change in income. D) the small size of the program. 10) During the 2007-2009 financial crisis, many households found themselves with debts to repay. How might this explain the consumer response to the 2008 Tax Rebate?