Principles of Macroeconomics / Unit 14 MAC 1327 short lesson, about 20 seconds
Temporary Against Permanent
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The idea
People respond more to a change they expect to last than to one they know is temporary, because a temporary change barely moves lifetime income. Countercyclical policy is temporary by design.
In practice
This is unit nine's permanent income hypothesis, arriving as a policy problem.
Where people slip
So the feature that makes a measure responsible also makes it weaker.
Your place on the trail
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