Assume That Consumption Decisions Are Made According to the Permanent

Multiple Choice

Assume that consumption decisions are made according to the permanent income theory. Which of the following would lead to the largest increase in current consumption?

A) Winning $10,000 in the lottery.
B) Obtaining $10,000 by winning a lawsuit.
C) Getting a one- time $10,000 bonus from your employer.
D) Taking a new job with a salary that is $10,000 higher than your current salary.
E) Inheriting $10,000 from a relative.