If you won the state lottery and were guaranteed a monthly income of $5000 for life then ________ would argue that your ________ income has increased.
A)Friedman;permanent
B)Friedman;transitory
C)Modigliani;transitory
D)Modigliani;permanent

Question

Quizplus · Accepted Answer

Friedman's theory of the permanent income hypothesis suggests that individuals base their spending decisions on their expected permanent income rather than temporary or transitory income. Winning the lottery and receiving a guaranteed monthly income for life would be considered a permanent increase in income according to Friedman.

If You Won the State Lottery and Were Guaranteed a Monthly