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Which of the Following Statements Is True

Question 176

Multiple Choice

Which of the following statements is true?


A) According to the permanent income hypothesis,a person who received a windfall of say $100,000 would spend most of it that year.
B) As disposable income rises,induced consumption falls.
C) The minimum amount that people will spend if disposable income is zero is called induced consumption.
D) A rapid increase in the prices of residential housing results in an increase in consumption due to the wealth effect.

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