A permanent increase in income leades to
A) a large increase in current consumption.
B) a small increase in current consumption.
C) a small decrease in future consumption.
D) a small increase in future consumption.
E) a large decrease in future consumption.

Question

Quizplus · Accepted Answer

A permanent increase in income typically leads to a large increase in current consumption because individuals adjust their consumption patterns based on their expected lifetime income, smoothing consumption over time.

A Permanent Increase in Income Leades to