Suppose that Jake and Abby each win $1,000 in a state lottery.Jake spends his winnings on a new television.Abby saves her winnings for a "rainy day." Which of the following is correct?
A) Both Jake's and Abby's behavior suggest that they base their purchasing decisions on transitory income.
B) Jake's behavior suggests that he bases his purchasing decisions on transitory income rather than permanent income. Abby's behavior suggest that she bases her purchasing decisions on permanent income rather than transitory income.
C) Jake's behavior suggests that he bases his purchasing decisions on permanent income rather than transitory income. Abby's behavior suggests that she bases her purchasing decisions on transitory income rather than permanent income.
D) Both Jake's and Abby's behavior suggest that they base their purchasing decisions on permanent income.
Correct Answer:
Verified
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