3
lesson pretestMultiple Choice

Pretest

Question 3 • CMS 2026-2027 Economics and Personal Finance CREDIT RECOVERY

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

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

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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