An individual's permanent income is
A)constant over time.
B)the same as his current income.
C)unaffected by tax changes.
D)equal to his expected average income.

Question

Quizplus · Accepted Answer

Permanent income is an individual's expected average income over a long period of time. It takes into account fluctuations in current income due to factors such as temporary unemployment, bonuses or overtime pay, and unexpected windfalls. Permanent income is not affected by short-term changes in taxation or other economic factors that can impact current income. Therefore, option D, "equal to his expected average income," is the correct answer.

An Individual's Permanent Income Is