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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