21
QuizMultiple Choice

Economic Policy: Influential Theories — Quiz

Question 21 • Economics

Milton Friedman argued that consumers are more likely to alter their behavior based on

Answer
A
changes in the unemployment rate.
B
long-term changes in the economy.
C
changes in the inflation rate.
D
short-term changes in the economy.

Explanation

Friedman’s permanent-income hypothesis says consumers base spending mainly on their expected long-term income, rather than reacting strongly to temporary economic changes. Therefore, they are more likely to alter their behavior in response to long-term changes in the economy.

AI-written and checked against the verified answer.

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