In the permanent income hypothesis,income is divided into ________.
A)current and future income
B)future and transitory income
C)transitory and permanent income
D)permanent and current income

Question

Quizplus · Accepted Answer

According to the permanent income hypothesis, income is divided into two categories: transitory and permanent income. Transitory income refers to short-term or temporary changes in income, while permanent income refers to the long-term or sustainable level of income. The hypothesis suggests that individuals base their consumption decisions on their permanent income rather than their current or transitory income.

In the Permanent Income Hypothesis,income Is Divided into ________