What were Keynes’s three conjectures about the consumption function?
Describe the evidence that was consistent with Keynes’s conjectures and the evidence that was inconsistent with them.
How do the life-cycle and permanent-income hypotheses resolve the seemingly contradictory pieces of evidence regarding consumption behaviour?
Use Fisher’s model of consumption to analyze an increase in second-period income. Compare the case in which the consumer faces a binding borrowing constraint and the case in which he does not.
Explain why changes in consumption are unpredictable if consumers obey the permanent-income hypothesis and have rational expectations.
Give an example in which someone might exhibit time-inconsistent preferences.