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According to the Permanent-Income Hypothesis,a Permanent Increase in a Person's

Question 2

Multiple Choice

According to the permanent-income hypothesis,a permanent increase in a person's income will


A) increase consumption more than savings.
B) increase savings more than consumption.
C) be smoothed out to where the increases in consumption and savings are roughly equal.
D) have the same effect on consumption as a transitory increase in income.

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