Economics · Consumption Theories
Identify the correct statements according to Milton Friedman's Permanent Income Hypothesis: 1. Consumption expenditure is proportional to permanent income (YP), i.e., C = kYP. 2. In the case of high-income groups, transitory income is negative on average over time. 3. Transitory income for low-income groups is negative on average over time (YT < 0).
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- 11, 2 and 3
- 22 and 3 only
- 31 and 3 only✓
- 41 and 2 only
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1 and 3 only
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