According to the Permanent Income Hypothesis

Multiple Choice

According to the permanent income hypothesis,

A) a change in income regarded as permanent will have a greater impact on saving than on consumption.
B) a change in income regarded as temporary will have a greater impact on saving than on consumption.
C) regardless of whether a change in disposable personal income is permanent or temporary; people will change consumption by moving along the consumption function.
D) a change in income regarded as temporary will not affect consumption much since it will have little effect on average lifetime income.