According to the Permanent Income Hypothesis

question 185

Multiple Choice

According to the permanent income hypothesis,

• A) consumption in any period depends on the stable annual income that people expect to earn in their jobs.
• B) the amount of income that people require depends on the amount of consumption they need and want to undertake.
• C) consumption in any period depends on the average annual income people expect to receive for the rest of their lives.
• D) the amount of personal saving depends on the amount of consumption people plan to undertake when they retire.

---

Definitions:

Cognitive Processes

Changes in an individual’s thinking, intelligence, and language skills.

Socioemotional

Relating to the interplay between social processes and emotional experiences.

Beginning Language

The initial stages of language development in children, characterized by the acquisition of basic vocabulary, syntax, and the ability to use words to communicate.

Coordination

The ability to use different parts of the body together smoothly and efficiently or the organization of different elements in a system to work together effectively.