Modigliani's consumption function differs from both Friedman's and Keynes' function in which of the following?
A) it is based on forward looking expectations
B) it is based on disposable income received over time
C) it is based on the value of assets accumulated over time
D) it is based on disposable income or permanent income

Question

Quizplus · Accepted Answer

Modigliani's consumption function, part of the Life-Cycle Hypothesis, emphasizes the role of accumulated assets and wealth over a person's lifetime, unlike Friedman's focus on permanent income or Keynes' focus on current disposable income.

Modigliani's Consumption Function Differs from Both Friedman's and Keynes' Function