According to the Permanent-Income Hypothesis, Consumption Depends Primarily on ______

question 72

Multiple Choice

According to the permanent-income hypothesis, consumption depends primarily on ______ income.

• A) current
• B) nominal
• C) permanent
• D) transitory

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Definitions:

Cash Flow From Assets

The total of cash flow to bondholders and cash flow to shareholders, consisting of operating cash flow, capital spending, and additions to net working capital.

EBIT

Earnings Before Interest and Taxes, a measure of a company's profitability based purely on operational and business activities without considering interest and tax expenses.

Depreciation

An accounting method used to allocate the cost of a tangible asset over its useful life.

Net Capital Spending

The total expenditure on physical assets less any asset sales, reflecting how much a company is investing in its physical assets.