Question

what is permanent income hypothesis and how it works?​

Answer 1

Answer:

The permanent income hypothesis is a theory of consumer spending stating that people will spend money at a level consistent with their expected long-term average income. ... Rather, the theory predicts there will not be an uptick in consumer spending until workers reform expectations about their future incomes.

Answer 2

Answer:

The permanent income hypothesis is a theory of consumer spending stating that people will spend money at a level consistent with their expected long-term average income. The level of expected long-term income then becomes thought of as the level of “permanent” income that can be safely spent