The Assertion That Consumption Depends on Expected Average Annual Income

question 77

Multiple Choice

The assertion that consumption depends on expected average annual income is called

• A) permanent income.
• B) the current income hypothesis.
• C) current income.
• D) the permanent income hypothesis.

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Definitions:

Net Pay

Gross earnings, less deductions. Net pay, or take-home pay, is what the worker actually takes home.

Wages and Salaries Payable

Liabilities for wages and salaries that have been earned by employees but have not yet been paid.

Federal Income Taxes Payable

The amount of income tax that a company or individual owes to the federal government and has not yet paid.

Payroll Taxes Payable

Liabilities owed to tax authorities for employee taxes withheld and employer payroll taxes; to be paid within a specified period.