Economics · Consumption Theories
Match the consumption theories in Column I with their key distinguishing features in Column II: Column I (Theory) (P) Absolute Income Hypothesis (Keynes) (Q) Permanent Income Hypothesis (Friedman) (R) Life-Cycle Hypothesis (Modigliani) (S) Relative Income Hypothesis (Duesenberry) Column II (Feature) (1) Non-proportional short-run consumption; APC > MPC (2) C = kYp; APC = MPC in long run (3) Consumption smoothing over lifetime; APC > 1 in early & late life (4) Ratchet / Demonstration effect; past peak income matters
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1P-1, Q-2, R-3, S-4✓
- 2P-2, Q-1, R-4, S-3
- 3P-3, Q-4, R-2, S-1
- 4P-4, Q-3, R-1, S-2
Correct answer
P-1, Q-2, R-3, S-4
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