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According to Friedman's permanent income hypothesis, transitory consumption is influenced by:
  • a)
    Permanent income.
  • b)
    Transitory income.
  • c)
    Interest rates.
  • d)
    Anticipated future income.
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
According to Friedman's permanent income hypothesis, transitory consum...
Transitory consumption, like transitory income, is influenced by fluctuations in transitory income. It is regarded as unanticipated consumption, such as unexpected bills, and is not directly related to permanent income.
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According to Friedman's permanent income hypothesis, transitory consumption is influenced by:a)Permanent income.b)Transitory income.c)Interest rates.d)Anticipated future income.Correct answer is option 'B'. Can you explain this answer?
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