Aggregate private spending is stable according to non-activists PRIMARILY because

Question

Quizplus · Accepted Answer

The Permanent Income Hypothesis (PIH) and the Life-Cycle Hypothesis (LCH) both suggest that consumers smooth their consumption over time, making aggregate private spending more stable even if income fluctuates. These theories argue that individuals base their consumption on their expected lifetime income and savings, rather than just their current income, leading to a more stable aggregate spending pattern.

Aggregate Private Spending Is Stable According to Non-Activists PRIMARILY Because