According to Milton Friedman Theory of permanent component of consumption-expenditure depends on i. Transitory income alone ii. Transitory and permanent income iii. Permanent income alone iv. Windfall gains Codes :
A)i and ii are correct
B)i and iii are correct
C)ii and iv are correct
D)only iii is correct

Question

Quizplus · Accepted Answer

Milton Friedman's Theory of the Consumption Function suggests that an individual's consumption at a point in time depends on their permanent income, not on their current income which may include transitory elements. Permanent income is a person's normal, average income over the long term, excluding short-term fluctuations.

According to Milton Friedman Theory of Permanent Component of Consumption-Expenditure