Which of the following theories of consumption behavior was introduced by Milton Friedman?
A)the absolute-income hypothesis
B)the relative-income hypothesis
C)the permanent-income hypothesis
D)the life-cycle hypothesis
E)the random-walk hypothesis

Question

Quizplus · Accepted Answer

The permanent-income hypothesis was introduced by Milton Friedman. This theory suggests that people's consumption decisions are based on their expected long-term income rather than their current income or short-term fluctuations in income.

Which of the Following Theories of Consumption Behavior Was Introduced