[Related to the Economics in Practice on p. 622] Suppose
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[Related to the Economics in Practice on p. 622] Suppose that for your 21st birthday, your family decides to surprise yo
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[Related to the Economics in Practice on p. 622] Suppose that for your 21st birthday, your family decides to surprise you with a weekend trip to Las Vegas. Although you are a full-time college student and therefore do not have a large amount of money to spend on gambling, your excitement gets the best of you as you put $100 in a dollar slot machine. On your third pull of the handle, you win a jackpot which pays you $50,000 after all taxes have been taken out. Explain how the simple Keynesian model and the life-cycle theory differ with respect to how this $50,000 jackpot might influence your consumption. How might your answer change if instead of $50,000, your slot jackpot paid you $1 million?
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