According to the Permanent-Income Hypothesis, If Consumers Receive a Permanent

question 100

Multiple Choice

According to the permanent-income hypothesis, if consumers receive a permanent increase in their salary then they will:

• A) save most of it in the current year.
• B) spend most of it in the current year.
• C) spend one half of it and save one-half of it in the current year.
• D) not alter their consumption or saving in the current year.

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Definitions:

Hunger

A sensation caused by a lack of food, leading to the desire to eat.

Positive Energy Balance

A state in which calorie intake exceeds calorie expenditure, resulting in weight gain.

Calories

Units of energy that measure the amount of energy supplied by food and beverages and the amount expended by the body in activities.

Aerobic Exercise

A form of physical activity that uses large muscle groups, can be maintained continuously, and is rhythmic in nature, aimed at improving oxygen consumption by the body.