Milton Friedman argued that, on average, consumption is:
A) proportional to income.
B) a fraction of permanent income that rises as permanent income rises.
C) a fraction of permanent income that falls as permanent income falls.
D) proportional to permanent income.

Question

Quizplus · Accepted Answer

Milton Friedman's Permanent Income Hypothesis suggests that consumption is proportional to an individual's permanent income, which is a long-term average income level, rather than being directly tied to temporary fluctuations in actual income.

Milton Friedman Argued That, on Average, Consumption Is