Assume You Define Your Permanent Income as the Average of Your

Multiple Choice

Assume you define your permanent income as the average of your income over the most recent five years, and you always consume 90% of your permanent income.What is your current consumption if your income was $30,000 in the first of these five years and each year from then on you got a raise of $2,000?

A) $36,000
B) $34,200
C) $30,600
D) $28,800
E) $27,000