Multiple Choice
According to Friedman's permanent-income hypothesis, if the marginal propensity to consume out of permanent income equals 0.9 and current income equals $55,000 (of which $5,000 is transitory income) , then consumption should equal:
A) $5,000.
B) $45,000.
C) $49,500.
D) $55,000.
Correct Answer:
Verified
Correct Answer:
Verified
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