The Key Difference Between the Keynesian Theory of Consumption and the Permanent

Multiple Choice

The key difference between the Keynesian theory of consumption and the permanent income is that

A) the Keynesian theory suggests that consumption and saving decisions are likely to be based on pre- tax income alone.
B) the permanent income theory suggests that consumption and saving decisions are likely to be based on current income alone.
C) the permanent income theory suggests that consumption and saving decisions are likely to be based on both current income and expectations of future income.
D) the Keynesian theory suggests that consumption and saving decisions are likely to be based on expectations of future income alone.