According to Friedman's "permanent income hypothesis,"

A) Consumption today is based on income today.
B) Consumption for future periods is based on today's income.
C) Income is never permanent because of the government's ability to tax.
D) Consumption depends on our expected income stream over time.
E) Income today depends on our expected consumption over time.

Permanent Income Hypothesis

A theory suggesting that an individual's consumption at any given time is determined not just by current income but also by their longer-term income expectations.

Consumption

The action of using goods or services for personal use, satisfaction, or to fulfill needs.

Expected Income Stream

The anticipated series of payments received over time, often from investments, employment, or other sources of income.