According to the Permanent Income Hypothesis

question 176

Multiple Choice

According to the permanent income hypothesis,

• A) a change in income regarded as permanent will have a greater impact on saving than on consumption.
• B) a change in income regarded as temporary will have a greater impact on saving than on consumption.
• C) regardless of whether a change in disposable personal income is permanent or temporary; people will change consumption by moving along the consumption function.
• D) a change in income regarded as temporary will not affect consumption much since it will have little effect on average lifetime income.

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Definitions:

Hepat/o

A prefix associated with the liver.

Neur/o

A prefix related to nerves or the nervous system.

Phalang/o

A combining form used in medical terminology to refer to the phalanges, which are the bones in the fingers and toes.

Reproductive System

The system of organs and structures in the body involved in producing offspring, including the gonads, related glands, and the structures for fertilization and gestation.