Suppose that your annual income has averaged $20,000 for the past 10 years and that you expect it will average $20,000 over the next 10 years.If your income this year increases to $30,000 but your consumption expenditures don't change, then you are most likely acting according to the

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The permanent income hypothesis suggests that people base their consumption on their expected long-term average income rather than current income. Since your consumption doesn't change despite a temporary increase in income, it indicates you are acting according to this hypothesis.

Suppose That Your Annual Income Has Averaged $20,000 for the Past