Suppose That Your Annual Income Has Averaged $40,000 for the Past

question 144

Multiple Choice

Suppose that your annual income has averaged $40,000 for the past 10 years and that you expect it will average $40,000 over the next 10 years. If your income this year increases to $50,000 but your consumption expenditures don't change, then you are most likely acting according to the

• A) transitory income theory of consumption.
• B) current income hypothesis.
• C) permanent income hypothesis.
• D) disposable personal income theory of consumption.

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