The Fundamental Lesson of the Life Cycle and Permanent Income

question 89

Multiple Choice

The fundamental lesson of the Life Cycle and Permanent Income hypotheses is that:

• A)individuals smooth their consumption patterns over their lifetime.
• B)individuals vary their consumption patterns over their lifetime.
• C)individuals' consumption patterns vary as their income changes.
• D)individuals' consumption changes with changes in their temporary income.
• E)taxes are ineffectual.

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